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SenseTime Group’s IPO was considered a good way for the Hong Kong market to close the year as the stock exchange did not see enough high ticket listings this year due to a series of crackdowns by the Chinese government.
SenseTime Group Inc (HKG: 0200) recorded a very successful public market debut as its shares soared as high as 23% in the intraday session from the Initial Public Offering (IPO) listing price of HK$3.85 ($0.4937). Per a Reuters report, the SenseTime Group’s performance was hinged on the fact that investors had already digested the news of the company’s sanctions by the United States Treasury Department.
SenseTime Group raised a total of $740 million via the IPO and recorded a market cap of $3.8 billion at the session’s high. However, the shares ended the trading session at a price of HK$4.13, up 7.3% from the original listing price. SenseTime’s shares came off as the 5th most traded stock on the Hong Kong Stock Exchange with a total of 329.97 million shares being traded all of which were worth HK$1.406 billion.
“The main reason that support is coming to the share price is that the market has already digested the US sanction issue,” said Kenny Ng, Everbright Sun Hung Kai analyst. “SenseTime set the IPO price at the lower end of the range which left room for the price-performance after listing.”
SenseTime Group’s IPO was considered a good way for the Hong Kong market to close the year as the stock exchange did not see enough high ticket listings this year due to a series of crackdowns by the Chinese government. SenseTime came in as the fifth-largest IPO for the year according to data from Dealogic.
While the Chinese government crackdown impacted homegrown listing potentials, it also extended to local companies that listed abroad. DiDi Global Inc (NYSE: DIDI) was a prominent example of this showdown as the company has announced its plans to delist its shares from the New York Stock Exchange, months after it made its debut.
SenseTime Group IPO and the Low US Investor Participation
That the SenseTime Group IPO was a success was a wonder as American investors were prohibited from participating, leaving the shares buy-up exclusively to Chinese investors. The absenteeism of American investors follows the move by the Treasury Department in which it blacklisted the company and added it to its list of “Chinese military-industrial complex companies” on grounds that it helped in developing a facial recognition program to determine ethnicity, with a focus on identifying ethnic Uyghurs.
Despite being known for its advanced facial recognition technology, the company has denied the allegations, however, the bad press took its toll on investors’ perception of the company. The sanction which came on December 10 implied American investors could not take part in the IPO, accounting for the low turnout, and the firm was forced to postpone the listing which was initially slated for December 13.
The company said the success of the IPO can be attributed to commitments from Cornerstone shareholders, all Chinese institutions, who bought about 67% of the stock on offer in the IPO, up from the 58% stake flagged in the company’s first attempt per the Reuters report.