Chinese artificial-intelligence company SenseTime Group Inc. is trying to keep its initial public offering alive, according to a person familiar with the matter, as the Biden administration adds the company to a blacklist that will ban American investors from buying its shares.
On Friday, the pricing of SenseTime’s stock offering in Hong Kong didn’t take place as previously scheduled, thwarting the company’s plans to go public in a week’s time on Dec. 17. Companies going public in the city usually price their IPOs one week before the shares start trading, and investors who have placed orders don’t wire the money until the price is set.
Later Friday, the U.S. Treasury Department formally placed SenseTime on a list of companies that support China’s military, citing the role of its facial-recognition technology in assisting China’s suppression of mainly Muslim ethnic Uyghurs. The blacklisting bars Americans from investing in the company.
Hong Kong- and Shanghai-based SenseTime launched its IPO on Monday, and was poised to raise up to $767 million in what was already a scaled-down offering from the company’s previous $2 billion target, The Wall Street Journal reported. SenseTime had also secured so-called cornerstone investors that agreed to buy 60% of the shares on offer. Those investors included major Chinese state-owned companies and investment funds.
The latest deal setback happened after reports emerged this week that the Treasury Department planned to place SenseTime on the investment blacklist. The Hong Kong stock exchange on Thursday sent a formal inquiry to SenseTime, according to people familiar with the matter, who added that the company is working on answering the exchange’s questions.
SenseTime declined to comment.
Seven-year-old SenseTime is one of the world’s largest and most valuable facial-recognition and computer vision startups. It makes money from selling software that is used by governments and businesses for applications that include smart cities, surveillance and autonomous driving.
In October 2019, a SenseTime subsidiary in Beijing was among 28 Chinese entities that were added to a U.S. export blacklist for their involvement in northwest China’s Xinjiang region, where Chinese authorities have detained Muslim minorities. The U.S. move, which SenseTime has flagged as a “major risk” in its listing prospectus, could restrict the company’s ability to purchase certain technology, software and goods, it said.
The subsidiary’s designation on the Commerce Department’s entity list also made SenseTime’s IPO a hard sell to international investors, who were wary of the reputational and geopolitical risks, the Journal previously reported.
—Liza Lin, Rebecca Feng and Kate O’Keeffe contributed to this article.
Write to Jing Yang at [email protected]
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