Chinese Z.ai shares fall more than 10% after plans to raise $5 billion
In China, shares of artificial intelligence company Z.ai lost more than 10% on Monday after it announced plans to raise about $5 billion through a share placement and the sale of convertible bonds. This was reported by CNBC Top News.
Share placement and bonds
The Beijing-based company plans to issue up to 21.97 million new shares at HK$714 apiece. Gross proceeds from the placement are expected to total approximately HK$15.68 billion, or about $2 billion. The placement price is 10% below Friday's closing price of HK$793 per share.
Separately, Z.ai intends to issue zero-coupon convertible bonds worth 20.14 billion yuan, equivalent to approximately $3 billion, maturing in 2027. The bonds will initially be convertible at HK$892.50 per share, which is 12.5% above Friday's closing price.
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How the funds will be used
The company said it will use the funds raised to develop next-generation artificial intelligence models. In particular, the financing is intended for research and development, infrastructure for model training and inference, as well as their commercialization.
This is Z.ai's second major capital raise in two months: in July, the company placed shares worth approximately $4 billion. Last month, Z.ai's shares rose after the launch of a new AI model which, according to the company, runs entirely on Chinese-made chips. Z.ai also said it used 100,000 such chips to process online requests to the model. Shares of Chinese rival MiniMax also fell by about 5% on Monday.
