Z.ai, a Chinese artificial intelligence firm, experienced a sharp decline in its stock price, dropping more than 10% after revealing plans to raise approximately $5 billion through a combination of a share placement and a convertible bond sale.
The company intends to issue up to 21.97 million new shares at HK$714 each, which is a 10% discount from its previous closing price of HK$793, aiming to generate around HK$15.68 billion ($2 billion).
Additionally, Z.ai plans to issue 20.14 billion yuan ($3 billion) in zero-coupon convertible bonds, which will be convertible at HK$892.50 per share, representing a 12.5% premium to the last closing price.
The funds raised will be allocated towards the development of next-generation AI models, including enhancements in research and development, infrastructure for training and inference, and commercialization efforts. This fundraising effort follows a previous $4 billion capital raise just two months prior.
The announcement comes on the heels of a recent surge in Z.ai's stock after the launch of a new AI model utilizing 100,000 domestically produced chips. The negative market reaction also affected Z.ai's competitor, MiniMax, which saw its shares decline by about 5%