(Bloomberg). SenseTime Group Inc., a Chinese giant of artificial intelligence, jumped on the first day of trading in Hong Kong. This follows a rocky initial public offerings that was delayed because of concerns about U.S. sanctioned.  

In early trading, the stock gained up to 17%. SoftBank Group Corp. backed the company and it raised HK$5.78 Billion ($741 Million). It sold 1.5 billion shares at HK$3.85 apiece. That’s about half of its marketed range.

SenseTime has long been targeted by the U.S. for being one of China’s most prominent tech firms. The company sought to raise at least $2Billion in its initial public offering. The firm’s debut comes weeks after the U.S. Treasury Department sanctioned it over its alleged involvement in human rights abuses in Xinjiang, a charge it has vigorously denied. This follows a Commerce Department blacklisting under Trump. 

The listing went ahead, with $512m from nine key investors (including the Shanghai Xuhui Capital Investment Co.

“Due to the dynamic and evolving nature of the relevant U.S. regulations, we have required to exclude U.S. investors” from the global offering including the issuance in Hong Kong, it said in a revised filing to the city’s stock exchange earlier this month.

SenseTime, founded by computer scientists in 2014, specializes AI-powered software. The software analyzes images and faces on a large scale. The company competes with Alibaba (NYSE:) Group Holding Ltd.’s Megvii Technology has been backing a sale of shares in Shanghai.

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Bloomberg has compiled data that shows Chinese firms who have made their debut in Hong Kong from July when Beijing increased its clampdown on several industries have had their shares go up an average of 1 percent the first day. On average, nine companies that were listed before SenseTime experienced a drop of 2.8% in stock prices.

About 60% of the capital raised from SenseTime’s IPO will be used on research and development, Chief Executive Officer Xu Li said in a Bloomberg Television interview taped before the new sanctions were announced.

The firm has invested heavily in building super computers that can train client-facing AI models, an effort that’s set to pay off as the loss-making company scales up. The six-month revenue for June 30, at 1.65 billion Yuan ($259 Million), was nearly twice that of the previous year, while net losses decreased to 3.7 billion Yuan (from 5.3 billion in 2020’s first half).

“Cost is key for the commercialization of a technology,” said Xu, adding that the investments offer the company a clear path to achieving profitability.

In the comments made earlier this month, Xu also acknowledged that the Commerce Department’s sanctions had impacted its overseas expansion. However, Xu tried to downplay its impact by stating that people will embrace technology more effectively to reduce barriers.

Eighth paragraph: Updates, comments from the CEO

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