Chinese AI Giant SenseTime Reopens $770 Million IPO One Week After U.S. Blacklist

Visitors check out the booth belonging to SenseTime at the 2021 World Artificial Intelligence … [+] Conference in Shanghai on July 7, 2021.

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Chinese artificial intelligence giant SenseTime is pushing ahead with its initial public offering in Hong Kong despite being placed on a U.S. investment blacklist just one week ago, and the company is keeping its price range unchanged.

SenseTime is still seeking to sell 1.5 billion shares at a range of HK$3.85 to HK$3.99 apiece, the company said in a filing to the Hong Kong Stock Exchange. SenseTime, which is based in both Shanghai and Hong Kong, has updated its list of cornerstone investors that now includes state-owned Shanghai Xuhui Capital, Taizhou Culture & Tourism and HKSTP Venture Fund.

The cornerstone investors have agreed to subscribe for $512 million worth of SenseTime shares, which amounts to about 67% of the deal. SenseTime will set its final IPO price on Thursday, and it plans to start trading on December 30.

“Demand for the company’s IPO is still there, despite U.S. investors being banned from investing into it, ” says Ke Yan, head of research at Singapore-based DZT Research.

The company, however, warned in an updated prospectus that the U.S. investment blacklist may affect future interest in and the liquidity of its shares. 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 effectively bans Americans from investing in the firm.

The restrictions “could limit our group’s ability to raise funds, in particular, from U.S. investors, and the liquidity and market price of our publicly traded securities, including our Class B shares, could be adversely affected due to a lack of U.S. investor participation,” the company wrote in its amended prospectus.

SenseTime was founded in 2014 when professor Tang Xiao’ou established the company with two of his Ph.D. students, Xu Li and Xu Bing. The 53-year-old has a net worth of at least $3.4 billion based on his ownership in the company, although he isn’t as involved in its daily management. Tang is said to be responsible for SenseTime’s research strategies and partnerships with universities, and he also continues to teach AI-related courses at the Chinese University of Hong Kong.