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China’s AI startup SenseTime delays $767Mn Hong Kong IPO post US ban

China’s AI startup SenseTime delays $767Mn Hong Kong IPO post US ban
China’s AI startup SenseTime delays $767Mn Hong Kong IPO post US ban

SenseTime Group, an AI start-up based out of China, has reportedly announced a delay to its $767 million Initial Public Offering (IPO) in Hong Kong after it was placed on a US investor blacklist.

The company supposedly stated that it was still dedicated to completing the IPO and that it would release a supplementary prospectus as well as a revised listing timeline.

As per the its regulatory filings, the company had planned to offer 1.5 billion shares at a price range of approximately HK$ 3.85 to HK$ 3.99. This would have brought the total amount raised to $767 million, a number that had been already trimmed down from a target of $2 billion earlier this year.

Rather than announcing the listing on Friday, as planned, the startup found amidst urgent discussions with the HKEX as well as its lawyers regarding the deal's viability amid concerns of an impending US blacklist.

In the Hong Kong Stock Exchange's filing on Monday, the startup did not disclose any information on the timeline for an updated IPO.

According to sources, the organization was attempting to act hastily in order to avoid having to totally resubmit the IPO after 9th January, when financial numbers in the existing prospectus would need to be revised. The firm had retained cornerstone investors’ roughly $450 million and it could expect a majority of them to continue in the agreement.

The company also stated that it would be refunding all application capital in full, sans interest, to those who subscribed the company’s shares under the offering process.

The US Treasury inducted SenseTime to a list of China-based military-industrial complex corporations, effectively accusing the firm of developing facial recognition programs that may discern a user's ethnicity, with a special focus on indigenous Uyghurs.

SenseTime stated that it vehemently opposes the designation and allegations that were made in conjunction with it, describing the allegations as ‘baseless’.

The IPO of SenseTime, which was co-sponsored by China International Capital Corporation (CICC) as well as Haitong International, was HSBC's most high-profile offering this year.

Source credit: https://www.reuters.com/markets/us/chinas-sensetime-withdraw-767-mln-hong-kong-ipo-sources-2021-12-13/

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Sunil Jha

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