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China tech

Chinese AI startup SenseTime resumes push for $2bn Hong Kong IPO

Despite US blacklisting, company eyes market debut by fourth quarter

SenseTime specializes in AI software for facial recognition, tracking, object detection, image and video processing and data analysis. (Photo by Cheng Ting-Fang)

HONG KONG -- Chinese artificial intelligence startup SenseTime has revived plans for an initial public offering in Hong Kong that could raise as much as $2 billion, two people familiar with the matter say.

SenseTime is working with advisers to finalize a listing application with the Hong Kong stock exchange, the sources said. Approval is required, and listing typically occurs three to six months after the application is filed.

SenseTime last year deferred plans for an IPO after the U.S. blacklisted it and seven other Chinese technology companies in 2019, alleging their facial recognition software and other products contributed to human rights violations. The startup now eyes a late third quarter or fourth quarter debut that could raise $1.5 billion to $2 billion, the sources said.

"The company has maintained growth momentum despite the U.S. blacklist," one source said. "With the adoption of artificial intelligence tools such as facial recognition picking up speed, investors should bid well for SenseTime shares."

Media reports have said SenseTime intended a dual listing in Shanghai and Hong Kong, but the two sources said its current plans called for selling shares in Hong Kong first. The company is still weighing all of its options, and the IPO plans could still change. 

SenseTime did not immediately respond to an email sent after office hours seeking comment on the IPO plans.

When SenseTime co-founder Tang Xiaoou gave a presentation at Massachusetts Institute of Technology in 2018, he said his company beat Facebook to achieve a nearly 99% success rate for its facial recognition technology, making it one of the world's most advanced AI solution providers.

After the U.S. blacklisting, SenseTime held several investor meetings to explain the company's evolving business model, which now encompasses facial recognition, robot delivery, smart health and education. It also opted to raise about $1 billion privately from investors to fuel growth, people familiar with that effort said last year.

In January, Chinese media reported that SenseTime agreed on fundraising terms that valued the company at $12 billion.

SenseTime, founded in 2014, has raised $2.6 billion from investors including SoftBank Vision Fund, Hopu Investment Management and Fidelity International, Crunchbase data shows.

Beyond its operations in mainland China, the startup says it has a presence in Hong Kong, Japan, Singapore, South Korea, Saudi Arabia and the United Arab Emirates.

Cash flow remained negative as of last year given the company's investment plans, sources said. SenseTime's latest financial position was not immediately clear, though one source said revenue growth continued to be "strong."

Additional reporting by Kenji Kawase in Hong Kong

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