HONG KONG (Reuters) - Chinese artificial intelligence provider Megvii Inc, commonly known as Face++, said on Wednesday it raised $750 million in its latest funding round.

The funding raises startup Megvii's valuation to slightly over $4 billion as it prepares for an initial public offering in Hong Kong planned for later this year, said two sources with knowledge of the matter.

Bank of China Group Investment Ltd (BOCGI), the state bank's private equity arm, led the fundraising with $200 million, they said. BOCGI declined to comment on the fundraising.

Macquarie Group, ICBC Asset Management (Global) Co and a wholly-owned subsidiary of the Abu Dhabi Investment Authority, one of the world's biggest sovereign wealth funds, also joined the new round, Megvii said in a statement.

Existing investor Alibaba Group also participated in this round, said one of the sources. Alibaba declined to comment.

Megvii, also backed by Foxconn Technology, has enlisted Citigroup, Goldman Sachs and JPMorgan to work on its Hong Kong IPO, said the second of the two sources.

Megvii declined to comment further on its fundraising or IPO plans. All of the banks declined to comment.

Reuters reported in December that Megvii was targeting raising $500 million in a new funding round.

The proceeds will be mainly used to strengthen Megvii's technology capabilities in deep learning, accelerate the commercialization of its AI-enabled solutions, recruit talent and finance global expansion, according to the statement.

The fundraising comes amid Beijing's plans to build a ubiquitous closed-circuit television (CCTV) surveillance network and become an international leader in AI, a technology that is increasingly becoming key to various sectors.

Chinese and foreign investors are pouring money into the sector given Beijing's emphasis on the technology. Investments in the AI sector surged to $2.1 billion through 88 deals last year, more than four times the total value in the previous two years, data from Refinitiv showed.

Megvii's rival SenseTime Group Ltd has raised more than $600 million from SoftBank and its Vision Fund, valuing it in the most recent round at $7.6 billion.

Last year, Alibaba invested for the first time in Megvii, which provides the technology for Alipay, Alibaba's online payment unit, to use facial recognition to make transactions, Reuters reported.

Megvii Chief Executive Officer Yin Qi founded the company in 2011 with two friends from China's Tsinghua University, Tang Wenbin and Yang Mu. Megvii provides facial recognition and other AI technology to businesses including Alibaba, Ant Financial and Huawei Technologies and serves government entities and state-owned firms.

(Reporting by Julie Zhu and Kane Wu; Adding reporting by Shu Zhang; Editing by Christian Schmollinger)