Chinese AI developer Z.ai, also known as Zhipu, has raised around $5 billion through a combination of new shares and convertible bonds as it expands spending on AI research, computing infrastructure and growth.
Reuters reported the terms from a company filing.
$2 Billion From New Shares
Z.ai raised roughly $2 billion by placing 21.97 million new shares at HK$714 each, about 10% below the previous closing price.
The remaining $3 billion came from RMB 20.14 billion in convertible bonds due in September 2027.
Those bonds carry no coupon and were priced to yield between -0.5% and zero, meaning investors are effectively accepting little or even slightly negative fixed returns in exchange for the option to convert them into Z.ai shares.
The conversion price is HK$892.50, around 25% above the price paid by investors in the share placement.
Money Will Go Toward AI Compute and Expansion
Z.ai said the proceeds will be used for research and development, computing resources, infrastructure, expansion, strategic investments, possible acquisitions and working capital.
The computing budget is particularly important.
The company has already built a data center that does not rely on Nvidia GPUs, instead using Chinese-made AI accelerators. Scaling that infrastructure could require substantial investment as US export controls continue to restrict access to advanced American chips.
Z.ai has not disclosed how much of the new funding will be allocated specifically to computing hardware.
Investors Keep Backing Z.ai
The fundraising follows a sharp rise in Zhipu’s Hong Kong-listed shares, which had climbed roughly 2,000% from its January listing by June.
Analysts have previously warned that the company is likely to remain heavily loss-making for several years and may need repeated capital raises to fund expansion.
At the same time, revenue is growing rapidly. Z.ai is reportedly approaching $1 billion in annual sales, even while offering some of its strongest models with open weights.
Its GLM model family has also helped strengthen its position among China’s leading AI developers.
US Scrutiny Has Not Slowed Funding
The deal came shortly after the NSA, FBI and CISA named Z.ai in a US advisory accusing several Chinese AI companies of conducting industrial-scale model distillation.
US agencies alleged that Z.ai had extracted billions of tokens from advanced American models, including GPT and Claude systems.
China rejected the accusations as unfounded.
Despite the geopolitical pressure, investors still committed billions to the company only days later, showing that access to capital remains strong even as restrictions tighten around advanced AI hardware.
The latest fundraising also comes as other Chinese AI companies, including Moonshot AI, reportedly pursue multi-billion-dollar funding rounds of their own.
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