Key points
- Z.AI plans to raise about $5 billion in Hong Kong
- Three billion of it is zero-coupon convertible debt
- Anthropic named Zhipu in its distillation report two days ago
- Most of the money goes to next-generation models
Z.AI (2513.HK), the Beijing AI lab still widely known as Zhipu, plans to raise about $5 billion through a Hong Kong share placement and a convertible bond issue, according to the company's announcement to the Hong Kong stock exchange on Sunday. The shares are priced at a 10% discount to Friday's close. The placement is due to complete on September 16 and the bonds are due to be issued on September 18.
The financing comes two days after Anthropic's September 11 report alleged that Zhipu was one of seven Chinese labs that pulled Claude's outputs at scale to train their own models. The filing does not mention Anthropic's report or draw a connection between it and the financing.
The terms
The placement covers up to 21,965,000 new H shares at HK$714 each, a 9.96% discount to the HK$793 close on Friday, September 11, for gross proceeds of about HK$15.68 billion, or about $2 billion. China International Capital Corporation Hong Kong Securities and Guotai Junan Securities (Hong Kong) are the placing agents, working on a best-effort basis to find not less than six placees, which the filing describes as professional, institutional or other investors.
The bonds have a principal amount of 20.14 billion yuan, which the filing puts at about $3.02 billion, to be settled in US dollars. They carry no coupon, were priced at 100.5% of face value, and mature on September 16, 2027. The initial conversion price is HK$892.50, which the filing puts at a 12.55% premium to Friday's close and 0.07% above the five-day average. It is 25% above the placing price by our arithmetic. The placement and the bond issue are not conditional on each other, and each still depends on its own closing conditions.
The company intends to put about 60% of the net proceeds into research and development on its next-generation GLM foundation models and what it calls a Fully Self Training system, along with the training and inference infrastructure behind them, about 15% into expansion, and about 25% into capital structure, working capital and general corporate purposes.
In its distillation report, Anthropic said Zhipu rotated 273 fraudulent accounts to pull and clean Claude's reasoning traces, more than 3.4 million exchanges over 17 days in June and July. Anthropic's report put Alibaba at 151 million exchanges and Moonshot AI at 23 million.
In its August 31 interim results, Z.AI reported revenue growth of 399.7% from a year earlier, with gross margin falling to 26.4% from about 50%. The company said in the same announcement that it had deployed domestic chips as a primary source of inference capacity and that per-token inference cost had fallen about 80% since the start of the year.
