NEWS WRAP: Surging Xtalpi seizes on tech rally to raise $267 million

The Tencent-backed AI drug developer announced a major new fundraising as it steps up its AI project development

By Teri Yu

AI drug discovery company XtalPi Holdings Ltd. (2228.HK) announced on Wednesday it will raise HK$2.08 billion ($267 million) through a share placement, seizing on a recent surge in Chinese tech stocks. The Shenzhen-based company said it will place up to 342 million shares for HK$6.10 each, representing a 5.9% discount to the previous day’s close. The sale represents 8.52% of its enlarged share capital.

The company, whose backers include Tencent, said it would use proceeds from the placement to enhance its R&D capabilities, particularly in AI-powered drug discovery and intelligent automation solutions.

Also on Wednesday, XtalPi announced that one of its subsidiaries will work with state-owned Guangdong Henjian Investment to gear up the company’s “AI+ Technology and Industry Integration Innovation Consortium Project” in South China’s Greater Bay Area.

The project aims to enhance “AI+ Robotic Automation” technologies, creating an industrial incubation ecosystem to promote strategic industry development. XtalPi said it believes the initiative will facilitate the digital and intelligent transformation of industries in the Guangdong-Hong Kong-Macao Greater Bay Area and globally, particularly in AI-driven pharmaceuticals, new materials, new energy, and robotics.

XtalPi’s shares jumped 19% to close at HK$7.71 on Wednesday following the announcements. The stock was up another 7.3 % midway through the Thursday trading day and has gained 83% over the last month.

The company was listed on the Hong Kong Stock Exchange last June under a new rule that lowered the revenue threshold for specialist technology firms to list. On Monday, XtalPi said it expected to report more than HK$250 million in revenue for 2024, up about 44% from HK$174 million in 2023, signalling the company is transitioning from a pre-commercial high-tech company to a commercial one.

XtalPi is not the only company to tap the equity market during the recent wave of positive sentiment toward Chinese tech firms dating back to last fall and recently fuelled by the success of AI startup DeepSeek. Intelligent driving technology company Black Sesame (2533.HK) also announced it will raise HK$1.24 billion through a new share placement on Wednesday, and robot manufacturer Ubtech (9880.HK) announced a plan to raise HK$876 on Thursday.

The DeepSeek rally has driven a nearly 24% surge in the Hang Seng Technology Index over the last month, with the index closing at 5,639.05 points on Tuesday.  

Founded in 2015 by three Chinese MIT graduates, XtalPi calls itself a technology-driven pharmaceutical company that integrates AI, quantum physics and cloud computing to revolutionize drug discovery and materials science. Apart from Tencent, the company’s other investors include HongShan Capital, Google, China Life and Mirae Asset.

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