Proceeds to fund R&D, cloud expansion and potential M&A
Beijing-based artificial intelligence company Zhipu AI is raising US$4 billion through a private placement of 19.78 million new shares priced at HK$1,588 each, a near 13% discount to the stock’s Wednesday close of HK$1,825. Chinese investment bank CICC is acting as the placing agent for the transaction.
Shares surged as much as 22% in early trading Thursday before paring gains. The stock recently traded at HK$1,989 (US$253.72), outperforming the benchmark Hang Seng Tech Index, which declined 0.1%.
The company said proceeds from the placement will be used for research and development, cloud computing services, business expansion and potential mergers and acquisitions, with full deployment expected by the end of next year. “The continued advancement in model capabilities and the large-scale commercialization of AI applications have placed higher demands on the company’s capital strength and funding reserves,” Zhipu said.
Zhipu AI faces competition from domestic rivals including DeepSeek, Moonshot AI and MiniMax, all of which are heavily investing in large language models. Last month, DeepSeek raised more than US$7.4 billion in its first funding round, a deal that valued the Chinese firm at more than US$50 billion, according to people familiar with the matter. Zhipu launched its GLM-5.2 model, its most powerful large language model to date, also last month.
The company’s stock has rallied since its January listing, pushing its market capitalization above US$100 billion. The first lockup period following the listing expired earlier this week, a contractual restriction that had prohibited investors from selling their shares. The expiration could create more liquidity if investors sell. Morgan Stanley said in a recent report that Hong Kong faces a “meaningful amount of share unlocking and potential secondary selling” in July and September. “These events can create liquidity headwinds even when fundamentals remain intact,” it said.