After the US government moved to restrict American investors from buying its stock, Chinese artificial-intelligence jobs behemoth SenseTime Group Inc. filed revised documents for a Hong Kong initial public offering. It said it still plans to list before the end of the year.
The company announced early Monday in Hong Kong that it would relaunch its IPO later that day. It still intends to raise up to $767 million, with a maximum valuation of $17 billion, as stated in its original offering plan. The company's stock will begin trading on December 30.
The US Treasury Department placed SenseTime on a list of companies that it said support China's military on Dec. 10, the day before the company was set to price its IPO. The blacklist makes it impossible for American investors to purchase the company's stock including The United States claimed that facial-recognition technology developed by a SenseTime subsidiary was used in the Chinese government's efforts to identify and suppress primarily Muslim ethnic minorities in western China.
SenseTime postponed the share offering three days later. According to the Wall Street Journal, SenseTime hopes to relaunch the deal as soon as this month.
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SenseTime has increased its reliance on cornerstone investors to support the transaction. In large Hong Kong IPOs, cornerstone investors are common. They agree to buy a certain number of shares at any price in the range of a deal and hold that stock for at least six months, thereby endorsing the deal to others.
SenseTime continues to have nine cornerstone investors, though five of them have changed. Some Hong Kong-based hedge-fund managers, such as Pleiad Investment Advisors Ltd. and WT Asset Management Ltd., have dropped out. Xuhui Capital, a state investment vehicle established earlier this year and funded by the state-owned Assets Supervision and Administration Commission of Shanghai Xuhui District, is the most important new cornerstone.
The company added new information to its prospectus, warning that current and potential U.S. restrictions “could limit our group’s ability to raise funds, particularly from U.S. investors, and the liquidity and market price of our publicly traded securities” could be hurt.
The company reiterated its opposition to the blacklisting, which it previously stated was based on a fundamental misunderstanding of its business. “Our group’s products and services are intended for civilian and commercial uses and not for any military application,” SenseTime said.
According to SenseTime, its lawyers advised it that the sanctions only applied to an unlisted subsidiary, SenseTime Group Ltd., and not to the parent company, which was going public, implying that the blacklisting did not technically prevent U.S. investors from buying or holding its stock. Nonetheless, amazon flex jobs. it stated that it had decided not to sell shares to US investors as part of the IPO due to American regulations' "dynamic and evolving nature" and warned that the parent company or other units could be blacklisted in the future. Existing U.S. shareholders of SenseTime include the private-equity firm Silver Lake and chipmaker Qualcomm Inc.’s venture arm.
The Wall Street Journal jobs previously reported that SenseTime's IPO size had already been reduced from $2 billion earlier this year due to weak market sentiment and a previous U.S. blacklisting.
In October 2019, the US Department of Commerce placed a Beijing-based subsidiary of the company on a separate blacklist for exports known as the Entity List. The move limits SenseTime's ability to acquire certain technologies, software, and goods, and it was identified as a significant risk in the prospectus.
It has been a tumultuous time for Chinese companies listed in the United States. China Mobile Ltd. and China Telecom Corp. were forced to delist from the New York Stock Exchange after former President Donald Trump placed them on the same investment blacklist as SenseTime. Megvii Technology Ltd., SenseTime's competitor, has also been added to both blacklists.
