Z.AI Co. Launches $5 Billion Fundraising Effort in Hong Kong

Beijing-based AI model maker Z.AI Co. announced a $5 billion stock-and-convertible offering in Hong Kong on Friday. The fundraising plan includes raising approximately $2 billion through the placement of 21.97 million new shares at a 10% discount to Friday's closing price, and an additional $3 billion via zero-coupon convertible bonds due in 2027.

This move follows a $4 billion share placement in July, bringing the company's total funds raised in Hong Kong to approximately $9.6 billion this year. This is the highest amount for any issuer in the city this year except for Alibaba Group Holding Ltd. The company intends to use the proceeds for AI research, computing infrastructure, business expansion, strategic investments, and the development of next-generation AI models.

Market reaction was negative, with Z.AI shares falling more than 10% on Monday. The stock has declined more than 60% from its June record high. The announcement also impacted domestic competitor MiniMax, whose shares declined by approximately 5%. While Z.AI's annual recurring revenue reportedly grew from $250 million to $1.6 billion in five months, analysts have noted significant customer concentration risk amid high cash burn across Chinese technology firms.