Sensetime’s Hong Kong Ipo Oversubscribed, Minus American Investors After Us Sanctions

SenseTime Group’s initial public offering (IPO) in Hong Kong was oversubscribed, as global investors – minus Americans – shrugged aside US sanctions to bid for shares in one of the world’s premier artificial intelligence (AI) companies.

SenseTime received about HK$2 billion (US$256 million) of orders for the retail tranche of its relaunched IPO when the books closed at noon, an oversubscription of about 2.3 times, according to estimates by brokers. Shares of the company will trade for the first time on December 30, marking Hong Kong’s biggest IPO since September.

The result paled in comparison with the four-times oversubscription received by the Hong Kong-based company in early December before it was added to the US government’s sanctions list under the Uygur Forced Labor Protection Act. Even though the sanction did not bar US investors – both institutional funds and individual investors – from owning shares of SenseTime, the company excluded them from its stock sale.

“SenseTime’s current offering excluded Americans from buying its shares, which limited the pool of investors buying the stock,” said Tom Chan Pak-lam, chairman of Hong Kong Institute of Securities Dealers, an industry body of local brokers. “However, the quick relaunch and the oversubscription proves the resilience of Hong Kong’s IPO market when it’s faced with US sanctions.”

SenseTime postponed its IPO last week, becoming the biggest corporate casualty yet of the US legislation that passed earlier this month in the US House of Representatives.

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The relaunched IPO maintained the same number of shares on offer and pricing, selling 1.5 billion shares at between HK$3.85 and HK$3.99, with 10 per cent of the shares for retail IPO while the rest was reserved for international offering. The international offering closed on Wednesday was also fully subscribed, brokers said.

SenseTime lined up nine cornerstone investors, selling US$511.6 million of shares to them to anchor the stock sale. That was an increase from the US$450 million when the IPO first kicked off on December 6.

New investors include the HK STP Venture Fund, a fund under the city government’s Hong Kong Science and Technology Parks Corporation (HKSTP). Other new cornerstone investors include Guotai Junan Investments, a unit of mainland financial firm Guotai Junan. They replaced several cornerstone investors who withdrew their investments after the US sanctions, including Focustar Capital and Pleaid Funds.