Megvii's application will lapse next week six months after it was filed partly because of the impact of the coronavirus epidemic which has disrupted business activity in China. The company had hoped to raise between $500 million and $1 billion in its IPO, sources previously told Reuters. Megvii plans to refile for the deal as soon as it has updated financial data for 2019, said the people, who declined to be named as they were not authorised to speak to media.

The virus, which has claimed over 2,200 lives and caused widespread disruption in China, has also slowed down work by Megvii's auditor Deloitte, the sources said. Megvii and Deloitte declined to comment. The planned IPO was already facing a hurdle due to the US blacklisting, which bars Megvii from buying US parts and components without US government approval and was expected to make some prospective foreign investors, in particular US ones, wary, said the other source.

Megvii was put on the blacklist along with seven other Chinese companies for their alleged involvement in human rights violations related to Beijing's repression of Muslim minority populations in the Xinjiang Uighur Autonomous Region. Megvii said at the time it strongly objected to being blacklisted, and there were "no grounds" for the designation.

Copyright Reuters, 2020