Follow South China Morning Post, China’s largest artificial intelligence (AI) company SenseTime on December 11 rejected US accusations of aiding human rights abuses in Xinjiang, after the US Treasury Department put the company on an investment blacklist. right before the implementation of the plan to list shares in Hong Kong.
SenseTme has more than halved its IPO size amid a sell-off in tech stocks due to US regulatory and privacy concerns
The US Treasury Department announced on December 10 that it had imposed economic sanctions on SenseTime and two senior government officials in Xinjiang for alleged human rights violations. The move forced SenseTime to cut its IPO size in half, amid a sell-off in tech stocks due to US regulatory and privacy concerns. The company also did not price its share offering, which is poised to raise HK$5.99 billion (about $768.3 million), on December 10 as scheduled because of the sanctions. Currently, the Chinese firm AI does not provide details on whether the expected listing date of December 17 will be kept.
In response to the US government’s sanctions, SenseTime said in a statement on December 11. “We strongly oppose the designation order and the allegations associated with it. Those allegations are baseless and reflect a fundamental misconception about our company. We regret being caught up in the midst of geopolitical tensions.” At the same time, SenseTime is also committed to promoting sustainable, responsible and ethical use of AI.
The latest sanctions of the US administration put SenseTime on the list of “Chinese military-industrial complex companies”. It shows the continued US action to crack down on Chinese corporations and officials seen as human rights abuses involving Uygurs, as well as other ethnic minority groups in Xinjiang.
Under an executive order signed by former US President Donald Trump last year, US companies will be banned from investing in blacklisted businesses. Therefore, some experts think that SenseTime is unlikely to avoid IPO delay. “The decision of the United States Department of the Treasury shall prohibit any American from buying or selling publicly traded securities, or derivatives of such securities, that are traded on a stock exchange in any jurisdiction. , including Hong Kong,” said Chen Weiheng, partner and head of US law firm Wilson Sonsini.
The new ban will take effect for 60 days from December 10. However, the American people will have one year until December 9, 2022 to divest SenseTime’s securities. “This sanction poses a significant challenge to SenseTime’s ongoing IPO as no new US investors will be involved and existing US investors will need to sell shares within a year. . SenseTime also needs to update the prospectus to reflect the new change, so there will be at least a delay. It also creates a difficult situation for the Hong Kong stock exchange as to whether it wants to set a precedent for a blacklisted company to be listed,” added Mr. Chen.
The decision to blacklist SenseTime also coincides with the final day of the Democratic Summit hosted by the US with more than 100 countries in attendance. Sanctions on SenseTime could deal a blow to US shareholders, including Silver Lake, a private equity firm with a 3% stake in SenseTime, and Fidelity, which owns a stake. less.