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Scaled-back $767M SenseTime IPO launches in Hong Kong

Scaled-back $767M SenseTime IPO launches in Hong Kong

The much-anticipated SenseTime initial public offering, set to be the largest-yet for a China-based facial recognition firm, has a target of raising $767 million in Honk Kong, Reuters reports based on a term sheet.

The IPO is slated for this month with the Monday launch, proposing to sell 1.5 billion primary shares for HK$3.85 to HK$3.99 (US$0.49 to $0.51). The top of the range would give the company a valuation of $17 billion. The share price is expected to be set Friday, with a first day of trading December 17.

A quartet of institutional investors has already subscribed for over 58 percent of the total amount, or $450 million. They are mainly state investors, with China’s Mixed-Ownership Reform Fund taking the biggest piece, and Shanghai Guosheng Group and Shanghai AI Fund taking major stakes, along with SAIC Motor Corp, according to the term sheet.

The term sheet also specifies that SenseTime intends to dedicate the majority of the funds raised to further research and development on its biometrics and other computer vision technologies.

The IPO comes despite what the Wall Street Journal characterizes as a “rout” among Chinese tech stocks. That may explain the much more modest scale than the $2 billion listing it was originally approved for in Hong Kong, following a series of delays. Some observers have suggested that SenseTime is racing to complete the deal before enhanced regulatory scrutiny is applied to mainland companies listing in Hong Kong, which may begin in 2022.

Co-founder and CEO Xu Li said at a press conference reported by the Journal that the SenseTime has a “clear path to profitability.” It made $540.5 million in revenue in 2020 and $259.1 million for the first half of 2021, according to its listing prospectus.

SenseTime also expanded recently, with a new office and several facial recognition and AI projects in Macau.

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