China’s AI leader Sensetime unveils US$260 million share placement plan

The AI company plans to issue 1.67 billion new shares at HK$1.20 each, or 9.1 per cent below its last-traded price the previous day, it said in an exchange filing on Friday

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Signage for SenseTime Group Inc. atop a building at Hong Kong Science Park in Hong Kong, China, on Wednesday, May 29, 2024. Photo: Bloomberg

Published: 10:19am, 21 Jun 2024Updated: 5:33pm, 21 Jun 2024

Sensetime, one of China’s leading artificial intelligence (AI) companies, is seeking to raise HK$2 billion (US$260 million) from a stock placement at a discount to the market price to help finance growth. The stock hit a seven-week low amid concerns about potential earnings dilution before rebounding to close 3 per cent higher.

The company plans to issue 1.67 billion new shares at HK$1.20 each, or 9.1 per cent below its last-traded price the previous day, according to a stock exchange filing on Friday. No shareholder approval is required as the placement is being made under a previously-approved mandate.

Sensetime, which principally engages in the sale of AI software, hardware and related services, hired Guotai Junan International and Huatai International to arrange the transaction. Net proceeds after the placing commission and other costs will be HK$1.99 billion.

The proceeds from the placement will be used mainly for further enhancing the scale of the company’s industry AI infrastructure – SenseCore, supporting the further development of generative AI including large model research and product development, and for the purpose of general working capital of the company, it said.

“SenseTime’s strategic advancements in AI technology, particularly through the development of the SenseNova 5.0 model and its fullstack product matrix, have positioned the company as a leader in the AI field in China,” said Ryan Wang, an analyst at DBS in a note earlier this month. He has a buy rating on the stock with a target of HK$2, representing a 47 per cent upside from the current level.