SenseTime shares jump more than 20% on delayed Hong Kong IPO

Shares in SenseTime jumped more than 20 per cent on its first day of trading almost three weeks after it postponed its initial public offering when the US blacklisted China's biggest artificial intelligence company.

SenseTime raised $740 million (€653 million) in Hong Kong on Thursday after its original listing plans were derailed when Washington barred Americans from investing in the company.

Uyghur rights

The administration of President Joe Biden has accused SenseTime, which specialises in facial recognition software, of enabling human rights abuses against Muslim Uyghurs in China's northwestern Xinjiang region. The company has denied the charges.

The listing was swiftly revived after Chinese state-backed entities stepped in and pledged to buy about two-thirds of the offering, with cornerstone investors increasing their pledges from $450 million to $511.6 million.

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The company priced the shares at the bottom of its range at 3.85 Hong Kong dollars (44 cent), giving it a valuation of $16.4 billion. SenseTime’s shares closed the session trading at 4.10 Hong Kong dollars, giving the company a market capitalisation of $17.5 billion.

Cornerstone

The largest cornerstone investor, the state-backed Mixed-Ownership Reform Fund, bought $200 million worth of shares, while the Shanghai local government fund Xuhui Capital purchased $150 million of shares.

Other state entities pledged to purchase more shares after the blacklisting forced backers of SenseTime such as Focustar Capital, the US investment group, to pull out. They are locked into their shares until the end of June 2022.

SenseTime is not profitable and will spend 60 per cent of the funds raised on research and development. This includes building a new AI supercomputing data centre near Shanghai that is set to be completed in 2022 and developing its own AI semiconductors. – Copyright The Financial Times Limited 2021