SenseTime Group shares jumped 23% from their initial public offering (IPO) when they floated on the Hong Kong Stock Exchange on Thursday.
Chinese artificial intelligence (AI) start-up raised $ 740 million on its IPO and valued its shares at HK $ 3.85 ($ 0.4937) each, at the low end of the reported range , valuing SenseTime at $ 16.4 billion.
The stock hit a high of HK $ 4.74 early in the session, topping the Hang Seng Index which rose only 0.19%.
The gains contrasted with most analysts’ expectations that stocks should slide or trade flat due to relative weakness in demand during the IPO process.
SenseTime sold 1.5 billion shares in its second attempt to list in Hong Kong in a matter of weeks.
It suspended its first attempt on December 13 after being placed on an investment blacklist just as institutional book-building for the deal was nearing completion.
The US Treasury added SenseTime to a https://www.reuters.com/article/us-sensetime-ipo-idCAKBN2IY0M8 list of “Chinese military-industrial complex companies” on December 10, accusing it of developing a facial recognition program to determine ethnicity, with emphasis on identifying ethnic Uyghurs.
UN experts and rights groups estimate more than a million people, mostly Uyghurs and members of other Muslim minorities, have been detained in recent years in a vast system of camps in the region. from Xinjiang, in the far west of China.
The blacklist meant that U.S. investors could not participate in the IPO.
SenseTime relaunched the deal on December 20, but with higher investor participation.
Cornerstone shareholders, all Chinese institutions, bought about 67% of the shares offered in the IPO, compared to 58% of the capital announced in the company’s first attempt.
Institutional investors have placed orders for just 1.5 times the amount of shares on sale in the international tranche, according to regulatory documents with the Hong Kong Stock Exchange.
Analysts said it was one of the lowest turnouts for a major deal in Hong Kong this year.
The retail oversubscription rate was 5.12 times, which analysts said was also low for an IPO in Hong Kong.
“We believe the exclusion of US investors from the IPO has led to low international subscription,” said Shifara Samsudeen, analyst for LightStream Research who publishes on SmartKarma.