SenseTime Halts IPO Over US Accusations of Human Rights Abuse

Chinese artificial intelligent giant SenseTime is suspending its $767 million initial public offering (IPO) listing in Hong Kong. The company took this decision because the US government is barring American investors from buying into the company. According to the US, this blacklisting comes on the grounds of human rights abuses from the leading Chinese AI firm.

SenseTime’s decision to postpone its IPO listing comes weeks after it secured the greenlight from the Hong Kong Stock Exchange. In addition, it is also indicative of the mounting tensions between the US and China. Three days ago, the US Department of Treasury added SenseTime to its investment blacklist of “Chinese military-industrial complex companies”. According to the Treasury Department:

“[SenseTime] has developed facial recognition programs that can determine a target’s ethnicity, with a particular focus on identifying ethnic Uyghurs.”

The US government believes that SenseTime-enabled technology facilitates the persecution of several Muslim minorities in Xinjiang – including the Uyghurs. However, the prominent Chinese AI firm strongly denies this accusation, releasing a counter-statement which read:

“We strongly oppose the designation and accusations that have been made in connection with it. The accusations are unfounded and reflect a fundamental misperception of our company. We regret to have been caught in the middle of geopolitical tension.”

SenseTime Demonstrates Commitment to Still Organizing the IPO Listing in the Near Future

SenseTime’s stock sale had been on track to be the AI firm’s biggest since September. However, in light of this recent development, the company now seeks to take some palliative actions. These include refunding all the investor IPO applications minus the associated interest. In addition, SenseTime also stated that they will publish a supplemental prospectus containing amendments and an updated schedule.

According to SenseTime, this will “safeguard the interests” of its potential investors. The prominent Hong Kong-based firm also doubled down on its commitment to “completing the global offering and listing soon.” However, SenseTime and its business associates declined to provide any other additional information as of press time.

Two regulatory sources posit that SenseTime can still revive its IPO listing within six months from when it first secured approval. The sources state that this is plausible provided the AI firm reveals the real impact of the US sanction to investors. However, after six months, the listing-approval validity period expires, and SenseTime may have to reapply. Furthermore, multiple major Hong Kong-based brokers, including Futu Securities and Interactive Brokers are currently trying to sweeten the deal. They pointed out a readiness to waive fees and interest payments for clients who subscribed to SenseTime’s IPO using margin loans.

Founded in 2014, SenseTime rakes in millions of dollars in revenue as one of China’s largest AI companies. Its services range from deploying technology to smart city systems and autonomous vehicles to medical image analysis and facial recognition. In fact, the leading AI firm was the world’s most valuable AI startup just four years after its inception in 2018. In addition, SenseTime also currently serves as a member of China’s national AI team – facilitating the Asian country’s tech superpower ambitions.

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