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China’s AI and facial recognition giant SenseTime is preparing an IPO in Hong Kong | Today Nation News

TechnologyChina's AI and facial recognition giant SenseTime is preparing...

SenseTime, one of the largest AI solution providers in China, has taken a step towards an IPO. According to media reports, SenseTime has received regulatory approval to be listed on the Hong Kong Stock Exchange.

Established in 2014, SenseTime is collectively known as the “Four Great AI Dragons” in China, along with Megvii, CloudWalk, and Yitu. In the late 2010s, SenseTime algorithms were in great demand from businesses and governments hoping to turn field data into actionable insights. Cameras incorporating the company’s AI model monitor the city 24 hours a day. Shopping centers use the company’s sensing solutions to track and predict congestion within the facility.

All three SenseTime rivals are considering selling their shares in mainland China or Hong Kong. Megvii is preparing to list on the STAR Board, a NASDAQ-style stock exchange in China, after the application to the Hong Kong Stock Exchange expires.

Related article: China‘s largest facial recognition unicorn Megvii is preparing an IPO in Shanghai

The road for Chinese data-rich tech companies to go public is narrowing. Beijing has made it difficult for companies with sensitive data to go public outside of China, and Western regulators are cautious about facial recognition companies that may help mass surveillance.

But in recent years, China’s up-and-coming AI companies have been sought after by investors around the world. In 2018 alone, SenseTime has raised over $ 2 billion in investment. So far, the company has raised an astonishing $ 5.2 billion in 12 rounds. The largest external shareholders include SoftBank Vision Fund (SVF) and Alibaba’s Taobao. SenseTime plans to raise up to $ 2 billion to go public in Hong Kong, according to Reuters.

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According to the prospectus, SenseTime spends most of its capital on research and development, costing more than RMB 5 billion ($ 780 million, about ¥ 89.7 billion) between 2018 and 2020. The company has posted a net loss for the past four years, mainly due to “loss on the fair value of preferred stock.” The net loss reached 3.7 billion yuan (about 66.6 billion yen) in the first half of 2021. The total deficit as of June is approaching 23 billion yuan (about 413.9 billion yen).

Like other companies in the same industry, SenseTime has a “smart city” project as a pillar of monetization, accounting for 47.6% of the total sales of 1.65 billion yuan (about 29.7 billion yen) for the six months to June. (27% in the same period of 2020). By June, 119 cities were using SenseTime’s software platform, according to the company’s prospectus.

The “Smart Business” line, which is tailored to the needs of companies such as commercial facilities and rental condominiums, accounted for about 40% of revenue in the first half of 2021. The company derives its remaining revenue from the “Smart Life” division, which supplies IoT devices, and “Smart Auto,” which applies perceptual intelligence to autonomous driving solutions.

Image Credit: Gilles Sabrie / Bloomberg via Getty Images

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(Sentence: Rita Liao, Translation: Aya Nakazato)

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