SenseTime IPO could help HSBC gain exposure

HONG KONG (Reuters Breakingviews) – Some transactions are not just about money. The successful debut of the artificial intelligence dragon SenseTime https://www.breakingviews.com/considered-view/sensetime-ipo-success-rests-on-overseas-investors could go a long way in revealing interest in Chinese technology politically sensitive. And it could do almost as much for HSBC, the issuer’s only prominent Western financial adviser, as it tries to show the investment bank’s renewed ambitions.

SenseTime recently gained approval in Hong Kong for its initial public offering, which could raise up to $ 2 billion. The developer of facial recognition and metaverse software will likely be the first company on the US Department of Commerce’s so-called Entity List to attempt an international listing. This will be the largest overseas IPO of a Chinese company since Didi Global’s disastrous $ 4 billion IPO in July that sparked a regulatory crackdown that hit Chinese stocks hard. . SenseTime owes its place on the blacklist, which bans sales of unapproved components, to a joint venture in Xinjiang, a regional home of the Uyghur minority, which ended in 2019.

HSBC is less known for its work on bold deals than for the serial hiring of top industry executives, from John Studzinski to Matthew Westerman, to bolster their business. The bank has only slipped into the top 10 providers of equity capital market advice in the past decade in Asia, excluding Japan, and has fared no better in its history. second house, Great Britain, according to data from Dealogic. It has also failed to reach the top five in Asia’s M&A charts since 2015.

New aspirations are stirred as HSBC boss Noel Quinn aims for more paid income. A presentation in June announced the priority of making its Global Banking and Markets division one of the world’s top five finance houses and improving its work in advising clients. The bank is moving Unit Co-Head Greg Guyett to Hong Kong and has recruited several industry bankers in the region to strengthen its boardroom-level access.

Alongside HSBC for the SenseTime IPO are China International Capital Corporation and Haitong International. Sensitivities will make selling more difficult, especially for fund managers who listen to environmental, social and governance issues. While Quinn doesn’t make much of his investment banking push, successfully peddling risky AI could help him gain recognition.

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NEWS CONTEXT

– Chinese artificial intelligence start-up SenseTime obtained approval on November 19 for a first public offering in Hong Kong, according to several media sources. The company is developing image recognition for cities and autonomous driving, among other applications, and designing software for the metaverse, a popular new investment area.

– SenseTime is one of many companies on a U.S. blacklist that requires component manufacturers to obtain official approval before they can sell their products to them.

– The company has yet to provide a fundraising target, but is expected to raise up to $ 2 billion, according to multiple media outlets.

(Edited by Jeffrey Goldfarb and Katrina Hamlin)

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