July 7, 2022

China’s artificial intelligence start-up SenseTime Group on Monday announced to postpone its $767 million Hong Kong initial public offering (IPO) after the company was placed on a U.S. investment blacklist.

According to SenseTime, they continue to remain committed to completing the IPO and further publish an additional prospectus with an updated listing timetable.

The company according to its regulatory filings had planned to sell 1.5 billion shares in a price range of HK$3.85 to HK$3.99, with the expectation to raise around $767 million. The figure had already been cut down earlier this year from a $2 billion target.

On Friday, the company instead of setting its listing price as scheduled however found itself in urgent talks with the Hong Kong Stock Exchange and its lawyers over the future of the deal over reports about the forthcoming blacklist.

So far the company has provided no details on the timetable for a revised IPO in its filing to the Hong Kong Stock Exchange on Monday.

According to sources, the company in order to avoid the regulatory requirement to completely re-file the IPO after Jan. 9 was originally trying to fasten the process, to when its financial numbers in the current prospectus would need to be updated. While from cornerstone investors it had retained about $450 million and is expected that most of them would continue to stay in the deal.

The company mentioned that it would refund all application dues to all applicants who subscribed its shares in the offering process in full, without interest.

According to reports, the U.S. Treasury have put SenseTime to a list called “Chinese military-industrial complex companies”. The list in particular accuses the company of having developed facial recognition programmes that can determine a target’s ethnicity. And this would be in particular focus on identifying ethnic Uyghurs.

In the third quarter, the Chinese AI company was due to be one of the biggest deals in Hong Kong, Its IPO was the most high profile listing for HSBC this year. The postponement has only added to the ongoing weakness in the city’s IPO market.

HSBC is a joint sponsor with China International Capital Corporation and Haitong International.