Chinese artificial-intelligence (AI) start-up SenseTime Group Ltd (商湯科技) yesterday said that it was postponing a planned US$767 million initial public offering (IPO) in Hong Kong after it was blacklisted by the US over human rights concerns in Xinjiang.
The US Department of the Treasury announced the ban on Friday, saying SenseTime’s facial recognition programs were designed in part to be used against Uighurs and other mostly Muslim minorities in Xinjiang, where UN experts and researchers estimate more than 1 million have been incarcerated in prison camps.
The blacklisting immediately cast a shadow over the company’s upcoming IPO plans in Hong Kong, which had been due to take place a week later and illustrated the risks investors face from competing sanctions rules as relations between the world’s two biggest economies have soured.
Photo: AFP
SenseTime yesterday filed a statement with the Hong Kong stock exchange saying it would postpone its listing “to safeguard the interests of the potential investors” as they weigh the impact of being placed on the blacklist.
The company said it “remains committed” to listing in Hong Kong soon and would fully refund those who had already invested.
The US sanctions and blacklisting can prevent individuals from obtaining visas to the US, block assets under US jurisdiction, and prevent the targets from doing business with US individuals or entities — effectively locking them out of the US banking system.
A blacklisting would make it all but impossible for US investment banks usually involved in Hong Kong listings to get involved, or for a US national to invest in the offering.
Washington said SenseTime is part of China’s “military-industrial complex.”
It had already placed the company on the US Department of Commerce’s blacklist in 2019, because its technology had been used for mass surveillance in Xinjiang.
It added that SenseTime had developed and deployed facial recognition software that can determine a person’s ethnicity, including whether someone looks Uighur.
SenseTime strongly criticized the latest blacklisting, saying in a statement over the weekend it was “caught in the middle of geopolitical tension.”
“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,” it said.
Founded in 2014 by academic Tang Xiao’ou (湯曉鷗) at the Chinese University of Hong Kong, the company has gone on to become one of China’s most valuable start-ups in just a few years.
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