SenseTime to launch US$770m HK IPO on Monday

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Asia

SenseTime Group, China’s largest artificial intelligence company, plans to start bookbuilding on Monday for a smaller-than-expected Hong Kong IPO of about US$740m–$770m, according to people with knowledge of the matter.

The company, in which SoftBank owns 14.9% and Alibaba Group 7.6%, is planning to sell about 4.5% of its enlarged share capital in the base deal at a valuation of US$16.5bn–$17.1bn, said the people.

SenseTime’s most recent private round in June valued the company at US$13bn.

Cornerstone investors will take up more than half of the float, said the people.

SenseTime had been looking to raise US$1bn–$2bn from its Hong Kong IPO through the sale of an around 10% stake, IFR reported earlier.

Challenging market conditions and investor concerns over Chinese regulators’ crackdown on technology companies prompted the issuer to sell fewer shares in the IPO, said the people.

The deal is scheduled to price on December 10. CICC, Haitong International and HSBC are the sponsors.

Chinese regulators have proposed rules to tighten scrutiny over cyber data security. In an updated IPO filing last month, SenseTime said it had not been subject to material fines, mandatory rectification or other sanctions imposed by authorities in relation to data and cybersecurity, and that the draft rules would not have a material adverse impact on its business.

SenseTime was among eight Chinese tech companies named on a US list in October 2019 as part of escalating trade tensions between Beijing and Washington.

It posted first-half revenue of Rmb1.65bn (US$255m) up 92% from a year earlier. Its adjusted net loss was Rmb578m, narrowing from Rmb1.15bn in 2020.

SenseTime has a weighted voting rights structure with founder Tang Xiao’ou, and co-founders Xu Li, Wang Xiaogang and Xu Bing as beneficiaries.