SenseTime, a China-based artificial intelligence (AI) system producer backed by corporates Alibaba, Qualcomm, SoftBank, Suning and Dalian Wanda, has paused its plans to go public in Hong Kong after being blacklisted in the United States on Friday, Bloomberg has reported.
The Hong Kong Stock Exchange (HKSE) had approved SenseTime’s initial public offering earlier this month, which would involve the company raising up to $767m, representing a lower figure than a reported $2bn initially.
Founded in 2014, Hong Kong-headquartered SenseTime provides AI-equipped semiconductors, sensors and software designed for use in computer vision, internet-of-things, self-driving cars and augmented reality products, in addition to healthcare and education applications.
SenseTime was set to price its shares on the HKSE on December 10 with a target valuation of up to $17bn, ahead of trading scheduled to begin a week later.
The US Department of Treasury included the company under the Chinese military-industrial complex companies list on the same day, on the grounds that the latter had “developed facial recognition programmes that can determine a target’s ethnicity, with a particular focus on identifying ethnic Uyghurs”.
US-based entities would not be able to buy or sell SenseTime’s publicly traded shares under the ban, and prompted the company to devise a new listing timeline to protect the interests of its prospective investors, it said.
SenseTime had already been included in the Entity List, which entails trade restrictions against selected organisations and individuals and is published by the US Department of Commerce’s Bureau of Industry and Security, in 2019 under former US president Donald Trump’s administration. The company was banned from engaging with key suppliers in the country, preventing it from accessing their technologies.
The latest move also took place on the United Nations’ Human Rights Day and was part of a series of measures announced by the US against multiple countries such as Myanmar, North Korea and Bangladesh, also coinciding with the last day of the US-hosted Summit for Democracy.
SenseTime said in a HKSE filing today that it would refund application fees to the investors and work on a revised prospectus in a bid to list “soon”. The statement read: “There will be a postponement of the global offering and the listing and the company expects to publish the supplemental prospectus…together with the updated listing timetable.”
Didi Chuxing, the $39bn ride hailing platform based in China, said earlier this month that it would file to delist from the New York Stock Exchange and would instead opt for Hong Kong, just six months after it had gone public in a $4.4bn IPO. In SenseTime’s proposed listing, UK-headquartered financial services provider HSBC was the only western entity involved.
SenseTime said in a statement: “We strongly oppose the designation and accusations that have been made in connection with it. The accusations are unfounded and reflect a fundamental misperception of our company. We regret to have been caught in the middle of geopolitical tension.”
