China AI developer Z.AI launches $5 billion Hong Kong share, convertible bond sales, term sheet shows

Beijing-based artificial intelligence company Z.AI Co Ltd has launched a Hong Kong share placement of about $2 billion and a ‌concurrent convertible bond ⁠sale of ⁠about $3 billion, according to term sheets seen by Reuters on Friday.

The fundraising comes as Chinese AI developers seek capital for the costly computing infrastructure and talent needed to compete with larger US rivals.

Z.AI, formerly known as ​Zhipu AI, went public in Hong Kong in January and raised about $4 billion in a follow-on share sale in July. Rival MiniMax also listed in Hong Kong earlier this year, ​while Moonshot and DeepSeek are pursuing potential listings in Hong ⁠Kong and ‌Shanghai, respectively, Reuters has reported.


Z.AI is offering 21.97 million new Hong Kong ​shares at HK$714 ($91.05) ​each, a 10% discount to Friday's closing price of HK$793, according to ⁠the sheet.

The company is also selling 20.14 billion yuan ($3 billion) of ​zero-coupon bonds due in September 2027, the sheet showed. The yuan-denominated ​bonds will be settled in US dollars.

The bonds will be issued at 100% to 100.5% of their face value, giving a yield ranging from negative 0.5% to zero, according to the sheet. The initial conversion price is HK$892.50, a 25% premium to the HK$714 share placement price.

Z.AI can redeem all, but not part, of the bonds from February ‌18, 2027, if its shares trade at or above 130% of the conversion price for 20 out of 30 trading days, according to the sheet.

The ​company plans ​to use proceeds from ⁠both deals for research and development, computing resources and related infrastructure, according to the sheet.

They will also fund expansion, strategic investments, potential acquisitions, working capital and other corporate purposes, the sheet showed.

The share ​placement and bond sale are being conducted at the same time but are not dependent on each other closing.

CICC is sole global coordinator and joint bookrunner with Guotai Junan Securities (Hong Kong) on the fundraising.

The company did not immediately respond to a request for comment sent outside office hours.