The Beijing-based company, formerly known as Zhipu AI, sold 21.97 million new H shares at HK$714 each, raising roughly HK$15.7 billion, or about $2 billion. It also issued 20.14 billion yuan, or about $3 billion, of zero-coupon convertible bonds due in September 2027, according to its Hong Kong exchange filing.
The equity was priced at a 10 per cent discount to the HK$793 closing price before the deal. The bonds were issued at 100.5 per cent of face value and carry an initial conversion price of HK$892.50, 25 per cent above the placement price. They will be settled in US dollars despite being denominated in yuan.
Z. AI said about 60 per cent of net proceeds would finance research and development for next-generation models and a fully self-training system. Another 15 per cent is earmarked for expansion, while the remainder will support its capital structure, working capital and general corporate purposes.
The financing follows a HK$31.41 billion, roughly $4 billion, H-share placement completed in July, only months after Z. AI raised about HK$4.9 billion net in its January Hong Kong initial public offering. By June 30, the company had already deployed about HK$4.59 billion of those IPO proceeds, leaving about HK$308 million unused.
Z. AI’s interim results show why access to capital remains important. Revenue for the six months to June 30 surged almost fivefold to 953.9 million yuan from 190.9 million yuan a year earlier, but the company posted a net loss of 2.07 billion yuan. Its adjusted net loss widened to 1.96 billion yuan from 1.75 billion yuan.
Research and development expenses reached 2.13 billion yuan in the first half, up 33.6 per cent, and were more than twice revenue. Capital expenditure rose more than sevenfold to 390.6 million yuan, while cost of sales climbed to 702.3 million yuan as computing-service fees increased with the rapid expansion of cloud-based activity.
The shift towards cloud delivery has accelerated Z. AI’s top-line growth but also pressured profitability. Cloud-based deployment generated 825.2 million yuan, or 86.5 per cent of first-half revenue, compared with only 29.1 million yuan a year earlier. Gross margin fell to 26.4 per cent from 50 per cent as that lower-margin business became dominant.
Cash at bank and on hand stood at about 3.99 billion yuan at the end of June, up from 2.26 billion yuan at the end of 2025, before the July placement. The company also had 789.8 million yuan of current bank loans and 1.43 billion yuan of non-current bank borrowings.
The new fundraising gives Z. AI a larger buffer as competition intensifies among model developers and technology groups. Building frontier systems requires sustained spending on chips, data centres, model training and specialist staff, while commercial revenue remains small compared with the investment needed to keep pace with leading laboratories.
Z. AI has sought to differentiate itself through its GLM family of models and an open-platform business that sells application programming interface access. Open-platform and API revenue reached 825.2 million yuan in the first half, up from 29.1 million yuan, as customer usage and token consumption increased.
The company’s financing pattern also resembles the repeated market tapping used by larger technology groups during capital-intensive expansion phases, though Z. AI lacks the mature cash-generating businesses that can internally fund such investment. That makes external equity and debt markets particularly important to its growth plans.
Under the bond terms, Z. AI may redeem the notes from February 18, 2027 if its shares trade at or above 130 per cent of the conversion price for at least 20 of 30 consecutive trading days. The share sale and bond issue were structured as separate transactions and were not conditional on each other.
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