Chinese artificial intelligence company SenseTime has decided to postpone its initial public offering in Hong Kong after it was put on a U.S. investment blacklist, although the company insists that it still intends to complete the listing.
SenseTime, based in both Shanghai and Hong Kong, will also amend its prospectus and issue refunds to retail investors, according to a filing made to the Hong Kong Stock Exchange. The company was originally scheduled to list on December 17, raising up to HK$5.78 billion ($770 million) by selling 1.5 billion shares at a range of HK$3.85 to HK$3.99 apiece. About two-thirds of the proceeds from the IPO were slated for research and development purposes.
But the U.S. Treasury Department added SenseTime to a list of Chinese military-industrial complex companies on December 10, citing its development of facial recognition software that can determine ethnicity and has been used to help the Chinese government identify ethnic Uyghurs in the province of Xinjiang. The move, which subsequently bans Americans from investing in the firm, drew a strong rebuke from SenseTime.
It said in an online statement issued the following day that “we strongly oppose the designation,” and the accusations are “unfounded and reflect a fundamental misperception of our company.”
Later, SenseTime said in a filing to the Hong Kong Stock Exchange, “The company remains committed to completing the global offering and the listing soon.”
A SenseTime spokesperson said there is no further comment on potential listing price and dates. Ke Yan, head of research at Singapore-based DZT Research, says the company could be forced to offer its shares at a 10–20% discount due to the previously unforeseen risks.
That would affect the wealth of Tang Xiao’ou, the billionaire professor who cofounded SenseTime with two of his Ph.D. students in 2014. The 53-year-old, who continues to teach courses such as image processing and signal analysis at the Chinese University of Hong Kong, was once poised to see his net worth jump about 50% based on the pricing of the IPO.
SenseTime, for its part, has found itself in the crosshairs of U.S. regulators in the past, when a subsidiary, Beijing SenseTime, was put on a U.S. trade blacklist in 2019 that now prevents the company from accessing American supplies and technology.