After being listed on a U.S. investment blacklist, Chinese artificial intelligence firm SenseTime Group postponed the vast $767 million Hong Kong initial public offering (IPO) on Monday.
The company’s proposal to withdraw the offering and rewrite its prospectus to highlight the potential impact of the U.S. investment prohibition, with the goal of resuming the IPO process, was first reported by Reuters on Monday.
SenseTime said in a statement to the Hong Kong exchange that it would offer refunds to retail investors as it works to prepare a supplemental prospectus with an updated listing timetable and other pertinent information. The company is still on track to complete the offering as soon as possible.
The postponement comes after the U.S. Treasury Department sanctioned the corporation on Friday for its alleged role in developing facial-recognition software used in the mistreatment of Uyghur Muslims in Western China’s Xinjiang autonomous region.
When news of the plan to put the firm to the Treasury Department’s list of so-called Chinese military-industrial complex corporations leaked on Human Rights Day, as well as SenseTime’s projected pricing, bankers were gauging investor interest in the IPO.
The corporation has been caught in the center of geopolitical tensions, and it will take the necessary steps to preserve our and stakeholders’ interests, SenseTime said.
According to regulatory documents, SenseTime planned to offer 1.5 billion shares at a price range of HK$3.85 to HK$3.99. This would raise the total amount to $767 million, down from a target of $2 billion earlier this year.
Instead of announcing its listing price on Friday as planned, it found itself in urgent talks with the Hong Kong Stock Exchange over a possible blacklist. Nevertheless, SenseTime stated that it remained dedicated to completing the offering and that a revised prospectus, as well as an updated listing timeframe, would be published.
China denies human rights violations in Xinjiang, but the U.S. government and several human rights organisations think Beijing is committing genocide there. In a filing to the Hong Kong Stock Exchange on Monday, SenseTime did not disclose any information on the timeline for a revised IPO.