It took only a few days for the bankers of China’s largest artificial intelligence company to reopen books on the delayed list. The United States has banned it investors from participation, and SenseTime then excluded them. The company instead provided about $ 500 million from nine investors. There is a good reason for his haste.
Many of the sponsors are Chinese state funds. These include the Mixed-Ownership Reform Fund and Shanghai Xuhui Capital. They got involved in bailing out an agreement following U.S. accusations – which SenseTime has denied – of developing facial recognition systems to spot members of the oppressed Muslim Uighur community in Xinjiang.
The support operation is not narrowly political. SenseTime’s technologies are widely used in Chinese everyday life, and Beijing is pushing for self-sufficiency in big data and artificial intelligence.
Reig could make it easier for the faltering Hong Kong market to digest the list. In addition to the founding investors, the planned amount of fundraising is $ 767 million, which is less than as much as $ 2 billion earlier this year, with an estimate of about $ 17 billion.
The returns are disappointing, and the ads are shrinkage. One of the biggest lists in the second half, Chinese music streaming platform Cloud Village, fell on its debut this month. Shares fell by a fifth last week despite being unrelated to big data, the focus of recent regulatory scrutiny.
Beijing may not approve technology lists outside of mainland China. Technology groups seeking a census in Hong Kong must pass cybersecurity reviews under new big data regulations. Successive measures have halted investment inflows.
The smaller size could be intended to reduce the chances of listing failure that would adversely affect joint sponsors including HSBC, China International Capital and Haitong. Local brokers BOCOM and Guotai Junan Securities have disappeared from the list of joint bookstores and insurers in their latest application.
Investors are right to be wary of a company facing obstacles in the U.S., through a blacklist, and China, through stricter data protection rules. Any local group that processes enough data is likely to be considered a target of the regulator. Understandably, SenseTime is in a hurry with its listing. But the damage may have already been done.
If you are a subscriber and want to receive alerts when Lex articles are published, just click the “Add to myFT” button, which appears at the top of this page above the title.