Seeking cash for AI, China’s Z.ai eyes new US$5b fundraising push after July share sale

Chinese artificial intelligence firm Z.ai aims to raise around US$5 billion in fresh funding after a July share sale. The company, also called Zhipu AI, plans to launch a new HK$15.7 billion (US$2 billion) placement of around 21.97 million H shares at HK$714 each. They also announced a HK$20.14 billion (US$3 billion) convertible-bond sale.

Z.ai's stock fell 73% from its June 22 peak after the placement, but it remains nearly seven times its January listing price. The fundraising efforts coincide with the expiry of the 60-day lock-up period post-July placement. Z.ai is also aiming to list on Shanghai's Star Market. The firm has completed regulatory approvals and shareholder approval for an HK$15 billion offering, though no application has been submitted yet.

Despite revenue increasing 400% to 953.89 million yuan (US$142 million) in the six months ending June 30, Z.ai reported a narrower loss, narrowing 12.1% to 2.07 billion yuan, while adjusted net loss rose 12.1% to 1.96 billion yuan. R&D spending surged by a third to 2.13 billion yuan, while cash reserves stood at 3.99 billion yuan as of June.

The company unveiled its latest flagship model, GLM-5.3, in August, followed by a more affordable multimodal version called GLM-5.3-Flash. Management revealed work on a next-generation model with enhanced parameters, longer context window, and native multimodal capabilities. Experts warn that Z.ai and rival MiniMax, both Hong Kong-listed Chinese AI firms, could remain loss-makers through 2030 as computing costs rise.

Macquarie Group’s head of Asia internet and software research, Ellie Jiang, estimates Z.ai's annual recurring revenue at around US$2.4 billion by year-end, though Jiang's projection is closer to US$3 billion.