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SenseTime says the US has ‘a fundamental misperception’ of the company as sanctions cloud IPO

  • The White House has placed the company on an investment blacklist over alleged human rights abuses in Xinjiang
  • Earlier this week, the AI company cut its IPO size by more than half amid a sell-off in technology stocks triggered by regulatory and privacy concerns

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Visitors walk past the stall of artificial intelligence and facial recognition technology company SenseTime at the Security China 2018 exhibition in Beijing on October 23, 2018. Photo: Reuters
Josh YeandDaniel Ren
SenseTime, China’s largest artificial intelligence (AI) firm, rejected US accusations that it aided human rights abuses in Xinjiang after the White House placed the company on an investment blacklist amid its plans to go public in Hong Kong.
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US President Joe Biden’s administration imposed economic sanctions on the Chinese company along with two senior government officials in far-west Xinjiang over alleged human rights abuses in the region, the Treasury Department announced on Friday. The move clouds the company’s plans to sell shares in an initial public offering (IPO) in Hong Kong after looming regulatory concerns had already forced the company to trim its IPO by about half earlier this week.

In response to the latest sanctions, SenseTime said in a statement on Saturday, “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 did not price its stock offering, which was poised to raise HK$5.99 billion (US$768.3 million), on Friday as expected as investors anticipated the sanctions. The company provided no details as to whether the scheduled listing date next Friday will be kept.

Friday’s sanctions by the White House, which places SenseTime on a list of “Chinese military-industrial complex companies”, add to the administration’s continuous moves to crack down on Chinese corporations and officials seen as violating the rights of Uygurs and other ethnic minority groups in Xinjiang, further entrenching Biden’s hardline stance on Beijing almost one year into his presidency.

“Treasury is using its tools to expose and hold accountable perpetrators of serious human rights abuse,” said Deputy Secretary of the Treasury Wally Adeyemo on Friday, identifying SenseTime as being responsible for “human rights abuse enabled by the malign use of technology”.

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According to an executive order signed by then-US President Donald Trump last year, American companies are barred from investing in businesses on the blacklist. As such, some experts said that a delay seems hard to avoid.

“US Treasury’s decision yesterday [ …] will prohibit the purchase or sale by any US person of any publicly traded securities or derivatives of such securities that trade on a securities exchange in any jurisdiction (including Hong Kong),” said Chen Weiheng, partner and head of China practice at US law firm Wilson Sonsini.

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