By
Godfrey Benjamin
December 30th, 2021
Prominent Chinese AI firm company SenseTime relaunches its $767M Hong Kong IPO with the exclusion of US investors.
Leading Chinese artificial intelligence firm SenseTime relaunches its $767 million IPO just days after being included on a US investment blacklist. Most of the details from the AI firm’s earlier version of the Hong Kong IPO remain unchanged. This includes its targeted valuation of $17 billion, and 1.5 billion shares up for grabs. In addition, SenseTime is eyeing an individual share price range of between HK$3.85 to HK$3.99 (Hong Kong dollars). However, one very noticeable difference in the company’s renewed initiative is that it will now exclude American investors. SenseTime issued a statement on Monday that touched on this exclusion. The provided reason was the “dynamic and evolving nature of the relevant US regulations”. SenseTime’s shares will start trading on December 30th.
SenseTime Relaunches IPO with Cornerstone Investors in Mind
According to SenseTime, it is relying on cornerstone investors to snap up about $511 million, approximately 67% of shares. This is up from the earlier projection sum of $450 million, or about 58% of shares. Furthermore, the leading AI firm also revealed the availability of an over-allotment option to issue another 225 million shares if required.
SenseTime’s swift rebound in reissuing shares a week after the initial postponement is likely to prove popular, according to local brokers. For instance, as Tom Chan Pak-lam, chairman of the Hong Kong Institute of Securities Dealers put it:
“The relaunch of SenseTime’s IPO is expected to be better than the last time as the company has disclosed all its risk factors. It is also likely to get the support of mainland-backed funds.”
SenseTime asserted that its inclusion on the US investors’ blacklist did not impede its business operations. However, the Chinese AI firm also acknowledges that the resulting lack of US investors could impact some of its future endeavors. This includes its ability to raise further capital, limiting trading liquidity.
US Blacklisted SenseTime Over Alleged Human Rights Abuses
SenseTime earlier planned its IPO on December 10th. However, the US Treasury Department swiftly placed the AI firm on a list of companies it alleges backs China’s military. According to the US Treasury, SenseTime’s technology played a major role in facilitating human rights abuses against the Uyghurs in China. In addition, the American national treasury also opined that other Muslim minorities in Xinjiang were victims of prejudice as a result. Therefore, the company’s subsequent blacklisting effectively barred American investors from buying into SenseTime.
At the time, SenseTime opposed the US government’s views, ascribing them to a fundamental misunderstanding of its business. According to the firm:
“Our group’s products and services are intended for civilian and commercial uses and not for any military application.”
Founded in 2014 in Hong Kong, SenseTime also ran into trouble with Washington in 2019. The company saw its Beijing subsidiary placed on a US entity list. Consequently, it could not transact US products without a license.
