Z.AI to raise $5 billion from share placement and convertible bonds

AI large-model developer Z.AI Co. Ltd. (2513.HK), also known as Zhipu, announced on Sunday it plans to concurrently place new shares and issue convertible bonds to raise combined net proceeds of up to about HK$39.27 billion ($5 billion), mainly to fund model development, computing infrastructure and business expansion.

The company plans to place up to 22 million new Hong Kong-listed H shares at HK$714 each, representing a 9.96% discount to last Friday’s closing price of HK$793, generating net proceeds of about HK$15.66 billion. It will also issue 20.14 billion yuan ($3 billion) of U.S. dollar-settled zero-coupon convertible bonds due in 2027, with an initial conversion price of HK$892.50 per share, raising net proceeds of about HK$23.61 billion.

Z.AI will use about 60% of the proceeds for R&D of next-generation GLM foundation models, training and inference computing resources and related infrastructure; 15% for business expansion, strategic investments and potential acquisitions; and 25% for working capital and other general corporate purposes.

This marks Z.AI’s second share placement since its IPO earlier this year. The company placed 19.78 million shares at HK$1,588 each in July, raising net proceeds of HK$31.37 billion. As of the end of August, it had used HK$10.95 billion of that, leaving HK$20.42 billion unutilized. Including the latest placement, the two placements will raise about HK$47.04 billion in net proceeds.

Z.AI’s revenue surged 400% year-on-year to 954 million yuan in the first half of this year, while it posted a loss of 2.07 billion yuan for the period. It had 3.99 billion yuan in cash and cash equivalents at the end of June.

The company’s shares opened lower on Monday and were trading at HK$735.5 at the midday break, down 7.25%.

By Lee Shih Ta

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