September 27, 2022

Hong Kong’s artificial intelligence start-up, SenseTime’s shares rise around 23% on Thursday due to their IPO price. Thus adding billions of dollars to its market-value as it debuted in Hong Kong in the city’s final major float for the year.

The market debut

• The company in its initial public offering had raised $740 million.
• It kept its share prices at HK$3.85 ($0.4937) each.
• The deal valued SenseTime at $16.4 billion, while its market capitalisation at the session’s high had gained some $3.8 billion.
• SenseTime in its debut session ended at HK$4.13, up 7.3% from its IPO price.
• The company’s shares had a turnover worth HK$1.406 billion and were the fifth most actively traded stock by turnover with 329.97 million shares.
• While tech stocks in Hong Kong were marginally positive on the day, with the broader Hang Seng Index gaining just 0.11%.
• The company sold a total of 1.5 billion shares in the IPO.

According to Dealogic data, the artificial-intelligence start-up was Hong Kong’s fifth largest IPO debut in 2021.

Apparently this year, Hong Kong has struggled to attract big ticket deals due to a regulatory crackdown on a number of sectors by the Chinese authorities.

SenseTime had cancelled its first attempt to debut its IPO eearlier on Dec. 13. It was being placed on the U.S. blacklist. While this happened just as the institutional book build for the deal was being concluded.

According to reports, the U.S. Treasury on Dec. 10 had added SenseTime to a list of “Chinese military-industrial complex companies”, accusing it of having developed a facial recognition programme to determine ethnicity, with a focus on identifying ethnic Uyghurs.

SenseTime in its defense commented that its inclusion on the blacklist however did not impose any restrictions on its business operations. While the ban only meant that U.S. investors wil not be able to participate in the IPO.

The company on Dec. 20 went ahead to relaunch the deal, but now with a higher cornerstone investor stake.

According to SenseTime, cornerstone shareholders, all Chinese institutions, bought about 67% of the stock on offer in the IPO, up from the 58% stake in its first IPO attempt. While institutional investors placed orders for just 1.5 times the amount of stock on sale in the international tranche. And lastly, the retail oversubscription rate was 5.12 times.