SenseTime seeks to value up to $ 17 billion when it IPO in Hong Kong

SenseTime, the Chinese artificial intelligence company specializing in facial recognition software, is looking to value as much as $ 17 billion on an IPO, which would be Hong Kong’s biggest listing in months.

The company plans to raise between $ 750 million and $ 767 million, according to a conditions sheet seen by the Financial Times. With 1.5 billion shares on offer representing around 4.5% of its stock, this target range would give it a valuation of between $ 16.5 billion and $ 17 billion.

SenseTime had previously hoped to raise up to $ 2 billion from its Hong Kong listing. The scaled-down IPO comes as China’s tech sector faces tougher regulatory scrutiny from Beijing, leading to a rout in shares of companies focused on e-commerce, gaming and food delivery.

The regulatory crackdown has hit fundraising in Hong Kong, which, at $ 26 billion, is down a fifth from last year’s total, even as global fundraising for introductions in The stock market jumped three-quarters, with transactions in New York reaching nearly $ 300 billion.

HSBC is the only Western investment bank involved in the SenseTime IPO, according to U.S. investment bank executives.

Other international lenders avoided the deal after SenseTime was blacklisted by the United States for allegedly aiding human rights abuses in China’s northwest Xinjiang region. SenseTime has denied the allegations.

“As an AI unicorn, its profitability has been [very limited]”said Edmond Hui, managing director of Hong Kong brokerage firm Bright Smart Securities, of SenseTime.

He added that the small size of the IPO was mainly due to concerns about market volatility, making it difficult to predict whether the company will receive the level of investor oversubscription typical of old tech listings in Hong Kong.

SenseTime opened books for the operation on Monday, with prices due on Friday and trading scheduled to begin on December 17.

The deal also included eight key investors who pledged to buy $ 450 million in shares, or about 59% of the offering if it is at the top of the target range. Core investors are commonly used in Hong Kong to build retail investor confidence and ensure a smooth listing.

SenseTime’s core investments included a $ 200 million stake held by the Mixed Property Reform Fund, established in late 2020 by state-owned China Chengtong Holdings and other investors under the auspices of the Supervisory and Supervisory Commission. administration of state-owned assets.

A person familiar with the deal said she has already received orders exceeding the proposed actions after considering key buyers, mostly long-term investors.

The main backers of SenseTime are SoftBank, Alibaba, Tiger Global and Silver Lake.

Sale of SenseTime shares to follow lackluster beginnings of Cloud Village, the music streaming business of tech group NetEase, whose $ 422 million IPO last week saw shares fall 2.5% .

SenseTime’s IPO will also mark the biggest bid in Hong Kong since the state-backed Dongguan Rural Commercial Bank raised $ 1.2 billion in September.

SenseTime’s listing could fetch up to $ 882 million if bankers execute a “green shoe” option, which would allow them to increase the size of the supply in response to strong demand.

But even then, the long-awaited list wouldn’t be Hong Kong’s biggest tech offering of the year, a title held by JD Logistics, the supply chain business of Alibaba rival JD.com, which has raised $ 3.6 billion in May.