Shares of SenseTime soared as much as 23% in their closely watched Hong Kong debut on Thursday, boosting the net worth of Tang Xiao’ou, the billionaire professor who cofounded the Chinese AI giant seven years ago.
Tang, who teaches information engineering at the Chinese University of Hong Kong, is the largest shareholder of SenseTime. His stake is worth as much as $3.8 billion based on a share price of HK$4.27 ($0.55), up from the IPO price of HK$3.85.
SenseTime’s debut was delayed from December 17 after the U.S. Treasury Department added it to a list of Chinese military-industrial complex companies, banning Americans from investing in the company. It cited SenseTime’s development of facial recognition software being used to help the Chinese government identify ethnic Uyghurs in Xinjiang.
SenseTime takes massive amounts of raw and real-time data, such as images and videos, and organizes the information through its AI software. Their software platforms analyze and interpret the raw data to enable automated decisions and process.
Their AI software ranges from workplace digitalization and automating workflow processes, such as incident prediction and automated task scheduling, to transcribing real-time city data into alerts used to track road damage or traffic accidents. In 2017, for example, SenseTime partnered with Honda in creating autonomous driving-related technologies.
SenseTime’s software platforms have been used by more than 2,400 customers, including over 250 publicly-listed companies as of June 2021, according to its prospectus. As of the first half of this year, 85.5% of SenseTime’s revenue came from mainland China, 12.3% from Northeast Asia, including Japan, and 1.3% from Southeast Asia.
Though revenue grew to 1.65 billion yuan (about $260 million) in the first half of this year from 861.2 million yuan in the same period last year, SenseTime is still in the red. It reported net losses of 3.7 billion yuan in the first half of this year and 12.2 billion yuan for the whole of last year, largely due to research and development expenses.
Major pre-IPO investors include SoftBank, Beijing-based Primavera (best known for its investments in Alibaba and Bytedance), Menlo Park-based Silver Lake (Airbnb, Dell and Twitter) and Beijing-based IDG Capital (Baidu, Coinbase and Tencent).
The AI software market in China is expected to grow at a compound annual growth rate of 41.5% in 2025, making it the fastest-growing among major markets globally, according to Frost & Sullivan research cited in the prospectus.
Tang started SenseTime in 2014 with Wang Xiaogang, his brother-in-law, who is also an engineering professor at the Chinese University of Hong Kong, and two of Tang’s Ph.D. students, Xu Li and Xu Bing.