A Chinese artificial intelligence startup that has been blacklisted by the US for its alleged involvement in human rights abuses is preparing to raise as much as $2 billion in a Hong Kong listing.
SenseTime plans to file for an initial public offering (IPO) in the former British colony as soon as the end of this month, three people with direct knowledge of the deal told Reuters.
The company was among eight Chinese tech companies placed on the US Entity List in 2019 amid trade tensions between Beijing and Washington. The US alleges the companies played a role in human rights abuses against Muslim minority groups in China.
The IPO filing also comes as China scythes through its tech sector with tough new regulations that have already led ride-hailing app Didi Chuxing to pull its apps from users’ devices and stymied a massive dual listing by fintech giant Ant Group.
SenseTime has hired Chinese investment banks CICC and Haitong International, as well as HSBC, to work on the float, the people said.
AF reported last year that SenseTime was considering an IPO. Other reports said the the listing was planned for China’s tech-focused STAR market in Shanghai and followed the raising of $1.5 billion in a private funding round that valued the company at $10 billion.
The company, however, is pushing forward with its Hong Kong listing as the plan to debut on the STAR has yet to go through because of a slowdown in approvals for domestic listings after the cancellation of Ant Group’s mega IPO late last year, two of the people said.
The regulatory crackdown on China’s internet majors has put companies’ overseas listing plans, particularly in the US, on hold pending new rules on data security.
The sources declined to be named as the information about SenseTime’s IPO plans are confidential.
HSBC and SenseTime declined to comment on the IPO. The other two banks did not respond to requests for comment.
Hong Kong-headquartered SenseTime provides technology-based applications including, facial recognition and video analysing and autonomous driving.
SenseTime said at the time of its blacklisting that it strongly opposed the ban and would work with relevant authorities to resolve the situation. On Thursday, the company declined to comment on the ban.
SenseTime plans to eventually list on the STAR after its Hong Kong debut, two of the sources said.
Its Chinese peer Megvii Technology has shifted to the STAR for an IPO of nearly $1 billion, according to a filing with the Shanghai Stock Exchange in March, after its planned Hong Kong listing plan lapsed in February 2020.
SenseTime counts Qualcomm Ventures, part of semiconductor group Qualcomm, as one of its strategic investors. Other existing investors include SoftBank Vision Fund, HOPU Investment Management Company, Silver Lake Partners and Alibaba.
The company plans to target Chinese and other non-US investors for the upcoming float, one of the sources said.
It would be challenging for US banks and investors to participate in SenseTime’s IPO because of sensitivity around the US ban, separate people familiar with the situation said.
- Reuters and Mark McCord