Shares of Chinese artificial intelligence firm Z.ai fell more than 10% on Monday following the announcement of a roughly $5 billion fundraising initiative, the company’s second significant capital raise in just two months.
According to a filing with the Hong Kong Stock Exchange, Z.ai plans to issue up to 21.97 million new shares at HK$714 each. This placement is expected to generate gross proceeds of approximately HK$15.68 billion ($2 billion). The issuing price reflects a 10% discount relative to the stock’s closing price of HK$793 on Friday.
In addition to the share placement, Z.ai intends to sell 20.14 billion yuan ($3 billion) in zero-coupon convertible bonds maturing in 2027. These bonds will initially be convertible into shares at HK$892.50 each, representing a 12.5% premium over the previous Friday’s close.
Z.ai stated that the capital generated from the offering will be directed toward the development of its next-generation AI models. Funds will support research and development efforts, as well as the expansion of training and inference infrastructure required for commercialization.
This latest round follows a similar move in July, when the Beijing-based startup raised approximately $4 billion through another share placement. The company recently saw its stock surge after unveiling a new AI model capable of operating entirely on domestically produced Chinese chips, utilizing a fleet of 100,000 local processors to handle online requests.
Market sentiment appeared broadly negative, with shares of domestic competitor MiniMax also declining by about 5% on Monday.
Wait, converting bonds at a 12.5% premium? They’re betting their stock skyrockets. Risky move if growth stalls.
Raising billions but diluting shareholders twice in two months? Bold strategy, but the market clearly isn’t buying it.