Just weeks after the US became part of SenseTime Group Inc. blacklisted for alleged human rights abuses, the company is poised to make founder Tang Xiao’ou one of the world’s richest people. China’s largest artificial intelligence company has priced its IPO at HK$3.85 (49 cents) per share, raising HK$5.55 billion.
That was the lower end of the expected range, but a signal that despite heightened tensions with the US and Beijing crackdown on tech giants, the country, including its massive surveillance equipment, continues to generate huge fortunes and huge profits for venture capitalists.
Tang, 53, a Massachusetts Institute of Technology graduate and a professor of information technology at the Chinese University of Hong Kong, has a 21% stake in the company and is worth $3.4 billion, according to the Bloomberg Billionaires Index.
A SenseTime representative declined to comment on Tang’s net worth.
SenseTime was long expected to be a blockbuster offering, but it has caught fire in recent years. It was forced to postpone its IPO this month after the US alleged that the company’s facial recognition software was being used in the repression of Uyghur Muslims in western China’s Xinjiang Autonomous Region. SenseTime has said the allegations that led to the sanctions are unfounded.
SenseTime is the first overseas offering of a high-profile Chinese tech unicorn since the IPO of giant Didi Global Inc. in New York in July sparked a regulatory backlash by officials in Beijing. The shares are expected to start trading in Hong Kong on December 30, giving the company a market value of more than $16 billion.
Tang has long been involved in developing the artificial intelligence needed for facial recognition.
He received his bachelor’s degree from the University of Science and Technology of China, then graduated from the University of Rochester in New York and received his PhD in 1996 from MIT, where he studied underwater robotics and computer vision.
He spent a few years working for Microsoft Research Asia and founded Shanghai-based SenseTime in 2014 with Xu Li, then a research scientist at Chinese computer maker Lenovo Group Ltd. The company attracted early investment from IDG Capital and subsequently secured backers including SoftBank Group Corp., Alibaba Group Holding Ltd. and Silver Lake.
According to the prospectus, it is now the largest AI software company in Asia with a market share of 11%. The technology is being deployed in a variety of areas, including helping police in China, providing product placements in movies, and creating an augmented reality scene in a mobile game by Tencent Holdings Ltd.
SenseTime relaunched its IPO process days after the blacklist with a group of cornerstone investors raising their bets from $450 million to $512 million. These include the state-backed Mixed-Ownership Reform Fund and the Shanghai Xuhui Capital Investment Co. Sponsors were China International Capital Corp., Haitong International Securities Group Ltd. and HSBC Holdings Plc.
The company later uploaded a legal opinion to the Hong Kong Stock Exchange, claiming that the restrictions did not apply to the parent company of the sanctioned unit. While the size of the offerings remained flat, retail investors were reportedly more cautious. Ultimately, the shares
“It makes sense that retail investors looking for short-term gains have become less enthusiastic about the sanction factor,” said Kenny Ng, strategist at Everbright Sun Hung Kai. “Especially because the overall Hong Kong stock market hasn’t been performing well lately.”
SenseTime’s revenue increased 14% last year to $3.4 billion yuan ($534 million), although it still posted an operating loss of 1.8 billion yuan.
“Tech companies need to invest even more in research and development early on to keep their technology competitive,” says Ng. “For SenseTime, maintaining stable income growth is more important than becoming profitable in the short term.”
(This story was not edited by DailyExpertNews staff and was generated automatically from a syndicated feed.)