SenseTime Group shares jumped as much as 23% from their IPO price as they debuted on the Hong Kong Stock Exchange on Thursday in the city's final major float for the year.
The Chinese artificial intelligence start-up raised $740 million in its initial public offering and priced its shares at HK$3.85 ($0.4937) each, at the bottom of the range flagged.
The deal valued SenseTime at $16.4 billion, while gains in the first trading session added up to $3.8 billion to the market capitalisation. The stock reached a high of HK$4.74, in a broader market that was up just 0.19%.
Some analysts had expected SenseTime shares to struggle on debut due to the relative weak demand during the IPO process and worries about the firm's inclusion on a US investment blacklist that prompted it to shelve its first attempt to list.
"The main reason that support is coming to the share price is that the market had already digested the US sanction issue," said Kenny Ng, Everbright Sun Hung Kai analyst.
"SenseTime set the IPO price at the lower end of the range which left room for the price performance after listing."
Some 177.4 million SenseTime shares worth HK$759 million changed hands, the second most actively traded by turnover in value terms for the day, following Tencent Holdings.
SenseTime's IPO is the fifth largest for the Asian financial hub in 2021, Dealogic data shows.
Hong Kong has struggled to attract big ticket deals this year due to a regulatory crackdown on a number of sectors by Chinese authorities.
'Poor international subscription'
SenseTime sold 1.5 billion shares in the IPO.
It shelved its first attempt on Dec. 13 after it was placed on the US blacklist just as the institutional book build for the deal was being concluded.
The US Treasury added SenseTime to a list of "Chinese military-industrial complex companies" on Dec. 10, accusing it of having developed a facial recognition programme to determine ethnicity, with a focus on identifying ethnic Uyghurs.
UN 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.
While SenseTime has said its inclusion on the blacklist did not impose any restrictions on its business operations, the ban meant US investors could not participate in the IPO.
SenseTime relaunched the deal on Dec. 20, but with a higher cornerstone investor stake.
Cornerstone shareholders, all Chinese institutions, bought about 67% of the stock on offer in the IPO, up from the 58% stake flagged in the company's first attempt.
Institutional investors placed orders for just 1.5 times the amount of stock on sale in the international tranche, regulatory filings with the Hong Kong Stock Exchange show.
Analysts said it was one of the poorest take up rates for a major deal in Hong Kong this year.
The retail oversubscription rate was 5.12 times, which analysts said was also low for a Hong Kong IPO.
"We think the exclusion of US investors from the IPO led to poor international subscription," said Shifara Samsudeen, LightStream Research analyst who publishes on SmartKarma.
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