China's Zhipu AI raises $4 billion in Hong Kong share sale, source says (updated)

Knowledge Atlas Technology JSC

Yesterday 12:40

Zhipu seeks fresh funds after January Hong Kong listing
Deal comes as Beijing weighs AI model export curbs
Shares jumped 13.4% before placement launch
Adds final price in paragraphs 1 and 2
By Yantoultra Ngui and Scott Murdoch

    July 9 (Reuters) - Knowledge Atlas Technology JSC 2513.HK, known as Zhipu AI, has priced its Hong Kong share offering at the bottom end of the range, raising around HK$31.41 billion ($4.01 billion), according to a source with direct knowledge of the matter.  
Zhipu sold 19.78 million shares at HK$1,588, the low end of the range of HK$1,588 to HK$1,698 per share, the person said.
The source could not be named as the information had not yet been made public. Zhipu did not immediately respond to a request for comment sent outside of Chinese business hours.
The deal came after Zhipu's shares surged 13.4% on Wednesday, extending strong gains in one of Hong Kong's hottest artificial intelligence stocks.
The final price represents a 13% discount to the stock's last close of HK$1,825. 
The accelerated bookbuild, a rapid share sale typically aimed at institutional investors, would increase the company's share capital by about 4.2%, according to a term sheet seen by Reuters.
 Chinese technology companies are turning to Hong Kong's capital markets to fund research, hiring and expansion as China seeks to narrow the gap with the U.S. in artificial intelligence.
 This week alone, several technology firms moved ahead with Hong Kong listings, including Nexchip Semiconductor, which priced an IPO to raise about HK$6.98 billion ($890 million).
 Investor demand for Chinese AI companies remains strong, although concerns about valuations have made buyers more selective, said Glenn Yin, research director at brokerage ACCM.
 "Raising $4 billion gives Zhipu significant firepower to compete, but it also increases pressure on the company to demonstrate that heavy AI investment can translate into sustainable commercial returns," he added.
 Zhipu plans to use the proceeds for research and development, including hiring, computing capacity and technical services, as well as business expansion, strategic investments, mergers and acquisitions, working capital and general corporate purposes.
 
 CHALLENGER TO THE U.S.
 Zhipu is one of China's best-known AI model developers and is viewed by investors as a fast-rising Chinese challenger to U.S. firms such as OpenAI, helped by strong demand for large language models.
 The fundraising also comes as Beijing considers tighter control over its most advanced AI technology. 
 Reuters reported on Tuesday that Chinese authorities had held meetings with top technology firms, including Zhipu, about possibly limiting overseas access to China's leading AI models, according to people familiar with the matter.
 Any such curbs could affect how Chinese AI companies sell or offer their models abroad, although Reuters could not determine how the restrictions would work.
 Zhipu raised HK$4.35 billion in its Hong Kong initial public offering at the start of the year. It said last month it aimed to raise 15 billion yuan from a planned STAR Market listing in Shanghai. The capital raising was led by CICC.
 Meanwhile AI startup MiniMax 0100.HK is working on a large language model with 2.7 trillion parameters, Reuters reported earlier on Wednesday. On Tuesday, the news of DeepSeek developing its own AI chip hurt sentiment towards U.S. chip stocks.
     
     ($1 = 6.7995 Chinese yuan renminbi)
     ($1 = 7.8395 Hong Kong dollars)


($1 = 7.8398 Hong Kong dollars)

 (Reporting by Scott Murdoch in Sydney, Nichiket Sunil, Rajasik Mukherjee and Sneha Kumar in Bengaluru and Yantoultra Ngui in Singapore; Editing by Joyjeet Das and Louise Heavens)
 ((Nichiket.Sunil@thomsonreuters.com;))