SenseTime, the Chinese artificial intelligence company specializing in face recognition software, is seeking a valuation of up to $ 17 billion in an initial public offering, in what would be Hong Kong’s largest listing in months.
The company plans to raise between $ 750 million and $ 767 million, according to a term sheet seen by the Financial Times. With 1.5 billion shares offered, representing about 4.5 percent of its shares, that target range will give it a valuation of between $ 16.5 and $ 17 billion.
Had SenseTime previously hoped to raise up to $ 2 billion from its Hong Kong listing. The diminished IPO comes as China’s technology sector faces greater regulatory scrutiny from Beijing, leading to a raw in the shares of companies focusing on e-commerce, games and food delivery
The regulatory repression has hit stock fundraising in Hong Kong, which is $ 26 billion a fifth lower than last year’s total, even though global IPO fundraising rose three-quarters, with transactions in New York alone rising to nearly $ 300 billion.
HSBC is the only Western investment bank involved in the SenseTime IPO, according to executives at US investment banks.
Other international lenders avoided the deal after SenseTime was blacklisted by US for allegedly assisting with human rights violations in China’s northwestern Xinjiang region. SenseTime denied the allegations.
“As an AI unicorn, its profitability was [very limited], ”Said Edmond Hui, CEO of Hong Kong broker Bright Smart Securities, of SenseTime.
He added that the IPO’s reduced size was mainly due to concerns about market volatility, making it difficult to predict whether the company will receive the level of investor oversight typical of previous technology listings in Hong Kong.
SenseTime opened books for the deal on Monday, with prices expected on Friday and trading to begin on December 17.
The deal also included eight cornerstone investors committing to buy $ 450 million worth of shares, equivalent to about 59 percent of the offer if it tops the target range. Cornerstone investors are widely used in Hong Kong to boost the confidence of retail investors and ensure a smooth listing.
The cornerstone investments for SenseTime included a $ 200 million stake to be held by the Mixed Ownership Reform Fund, which was established in late 2020 by state-owned China Chengtong Holdings Group and other investors under the auspices of China’s state-owned Asset Supervision and Administration Commission. .
A person familiar with the deal said it had already received orders in excess of the shares offered after taking into account cornerstone buyers, mostly from long-time investors.
Top SenseTime fans include SoftBank, Alibaba, Tiger Global and Silver Lake.
SenseTime’s share sale will follow the sluggish debut of Cloud Village, the music streaming company of technology group NetEase, whose reduced $ 422m IPO dropped last week’s shares by 2.5 percent.
The SenseTime IPO will also be the largest offering in Hong Kong since state-backed Dongguan Rural Commercial Bank raised $ 1.2 billion in September.
SenseTime’s listing could raise as much as $ 882 million if bankers executed a “green shoe” option, which would allow them to increase the size of the offering in response to strong demand.
But even then, the long-awaited listing would not be the biggest technology offering of the year in Hong Kong, a title that by JD Logistics, the supply chain business of Alibaba rival JD.com, which raised $ 3.6 billion in May.
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