SenseTime Group, a Chinese artificial intelligence startup, will pull out its $767 million Hong Kong initial public offering on Monday and amend its prospectus following its inclusion on a United States investment blacklist, two persons familiar with the matter told Reuters.
SenseTime missed Friday's IPO price deadline because of a media report that a blacklisting was impending.
Later that day, the U.S. Treasury Department added SenseTime to a list of "Chinese military-industrial complex businesses," as part of sweeping human rights-related penalties against dozens of individuals and entities linked to China, North Korea, Bangladesh and Myanmar.
The individuals, who spoke on condition of anonymity owing to the nature of the material, said an official announcement would be made to the Hong Kong Stock Exchange on Monday.
Bankers were assessing investor interest in the IPO when word surfaced of the Treasury Department's intention to add the firm to its list of so-called Chinese military-industrial complex companies, which was timed to coincide with Human Rights Day and SenseTime's planned pricing.
According to its market papers, the Hong Kong-based unicorn, Asia's largest AI software firm, planned to raise up to HK$5.99 billion (US$767 million) by issuing 1.5 billion shares at HK$3.85 to HK$3.99 each. That would have been less than 50% of the US$2 billion sought earlier in the year.
The company did not price its initial public offering on Friday in accordance with its schedule, throwing uncertainty on its December 17 market debut. SenseTime The company has made no announcements regarding the revised schedule.
Retail investors often receive their funds back once the company has completed its process.
SenseTime denied U.S. accusations that it helped human rights violations in Xinjiang on Saturday, calling the allegations "unfounded" following the U.S. Treasury Department's designation of the firm to an investment blacklist that prohibits Americans from purchasing stock in the company.
"We categorically deny the designation and the allegations made in connection with it," SenseTime stated on Saturday. "The allegations are baseless and reflect a fundamental misunderstanding of our business. We apologize for being caught in the crossfire of international conflicts."
Numerous new privacy and cybersecurity restrictions enacted this year have cast a pall over the country's technology sector, compelling companies to contemplate international listings.
For the first time, a draft regulation from China's Cyberspace Administration specified last month that certain companies who plan on listing in Hong Kong will also be subjected to a cybersecurity evaluation.
