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(Reuters) – Chinese artificial intelligence start-up SenseTime Group will withdraw its $767 million Hong Kong initial public offering (IPO) on Monday and update its prospectus, two sources told Reuters, after being placed on a U.S. investment blacklist.
The sources, who have direct knowledge of the situation but could not be named as the information was not yet public, said an official announcement would be made to the Hong Kong Stock Exchange shortly.
SenseTime, which was placed on a U.S. investment blacklist on Friday by the Biden Administration, did not immediately respond to a request for comment.
Three sources confirmed SenseTime’s decision to pull the IPO in its current form, while two of those people added the company would update the risk factors in its prospectus with the aim of relaunching the IPO process.
SenseTime had planned to sell 1.5 billion shares in a price range of HK$3.85 to HK$3.99, according to its regulatory filings, to raise up $767 million, a figure that had already been trimmed earlier this year from a $2 billion target.
However, instead of setting its listing price on Friday, as scheduled, it found itself in urgent talks with the Hong Kong Stock Exchange and its lawyers over the future the deal.
The U.S. Treasury added SenseTime to a list of “Chinese military-industrial complex companies,” accusing the company of having developed facial recognition programmes that can determine a target’s ethnicity, with a particular focus on identifying ethnic Uyghurs.
U.N. experts and rights groups estimate more than a million people, mainly Uyghurs and members of other Muslim minorities, have been detained in recent years in a vast system of camps in China’s far-west region of Xinjiang.
China denies abuses in Xinjiang, but the U.S. government and many rights groups say Beijing is carrying out genocide there.
SenseTime said in a statement on Saturday that it “strongly opposed the designation and accusations that have been made in connection with it,” calling the accusations “unfounded”.
