SenseTime IPO could help HSBC gain exposure

SenseTime monitoring software identifying details of people and vehicles is being demonstrated at the company’s office in Beijing, China on October 11, 2017. Photo taken on October 11, 2017. REUTERS / Thomas Peter

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HONG KONG, Nov. 26 (Reuters Breakingviews) – Some transactions are not just about money. A successful market entry by artificial intelligence dragon SenseTime could go a long way in revealing interest in politically sensitive Chinese technology. And that could do almost as much for HSBC (HSBA.L), (0005.HK), the issuer’s only leading Western financial adviser, as it tries to show the renewed ambitions of the investment bank.

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 list of entities to attempt an international listing. It will be the largest overseas IPO of a Chinese company since Didi Global’s (DIDI.N) disastrous $ 4 billion IPO in July which sparked a regulatory crackdown that has hard hit Chinese stocks. 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 working on bold deals than it is for hiring serial top executives in the industry, 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 Dealogic data. It has also failed to reach the top five in Asia’s M&A charts since 2015.

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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 (3908.HK) and Haitong International (0665.HK). 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 her investment banking push, successfully peddling risky AI could help her 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 new area of ​​popular investment.

– 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.

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Editing by Jeffrey Goldfarb and Katrina Hamlin

Our standards: Thomson Reuters Trust Principles.



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