Chinese AI startup SenseTime to file for Hong Kong IPO by end-August -sources

Haitong International Securities

19/08/2021 09:15

By Kane Wu and Julie Zhu
    HONG KONG, Aug 19 (Reuters) - Chinese artificial
intelligence startup SenseTime is planning to file for an up to
$2 billion initial public offering (IPO) in Hong Kong as soon as
the end of this month, three people with direct knowledge of the
deal told Reuters.
    The company, which Washington put on a trade blacklist in
October 2019, has hired Chinese investment banks CICC  3908.HK 
and Haitong International  0665.HK , as well as HSBC  HSBA.L ,
to work on the float, the people said.
    Reuters reported last year that SenseTime was considering an
 IPO https://www.reuters.com/article/us-sensetime-ipo-exclusive-idUSKCN24W1JN
 on China's tech-focused STAR market in Shanghai after raising
$1.5 billion in a private funding round that valued the company
at $10 billion.  urn:newsml:reuters.com:*:nL3N2F22VI
    The company, however, is pushing forward with its Hong Kong
listing as the plan to debut on the STAR has been progressing
slowly because of a slowdown of approvals for domestic listings
after the cancellation of Ant Group's mega IPO, said two of the
people. 
    Chinese regulators have tightened their scrutiny of domestic
IPO candidates after Ant Group's offering was halted in
November, days before it was due to start trading, because of
financial risk concerns.
    Regulators have also started a broader crackdown on China's
internet majors and most recently put companies' overseas
listing plans, particularly in the United States, on hold
pending new rules on data security.
    The sources declined to be named as the information about
SenseTime's IPO plans are confidential.
    HSBC and SenseTime declined to comment on the IPO. The other
two banks did not respond to requests for comment. 
    Hong Kong-headquartered SenseTime provides technology-based
applications including, facial recognition and video analysing
and autonomous driving.
    The company was among eight Chinese tech companies placed on
the U.S. Entity List https://www.reuters.com/article/us-usa-trade-china-exclusive-idUSKBN1WM25M
 in 2019 amid trade tensions between Beijing and Washington. The
U.S. alleges the companies played a role in human rights abuses
against Muslim minority groups in China.
    SenseTime said at the time that it strongly opposed the U.S.
ban and would work with relevant authorities to resolve the
situation. On Thursday, the company declined to comment on the
ban. 
    The company plans to eventually list on the STAR after its
Hong Kong debut, said two of the sources.
    Its Chinese peer Megvii Technology has shifted to the STAR
for an IPO of nearly $1 billion, according to a filing with the
Shanghai Stock Exchange in March, after its planned Hong Kong
listing plan lapsed in February 2020. 
    SenseTime counts Qualcomm Ventures, part of semiconductor
group Qualcomm, as one of its strategic investors. Other
existing investors include SoftBank Vision Fund, HOPU Investment
Management Company, Silver Lake Partners and Alibaba  BABA.N .
    The company plans to target Chinese and other non-U.S.
investors for the upcoming float, said one of the sources.
    It would be challenging for U.S. banks and investors to
participate in SenseTime's IPO because of sensitivity around the
U.S. ban, separate people familiar with the situation said.

 (Reporting by Kane Wu and Julie Zhu; Editing by Sumeet
Chatterjee and Christian Schmollinger)
 ((kane.wu@thomsonreuters.com; +85228436590; Reuters Messaging:
kane.wu.thomsonreuters.com@reuters.net))