The deal
Z.ai, the Chinese developer of the GLM models, also known as Zhipu, said on 13 September that it had completed about $5bn of new financing, TechNode reported. It comes roughly two months after a July share placement that raised about $4bn, according to the Seoul Economic Daily.
About $2bn came from placing 21.97 million new Hong Kong-listed shares at HK$714 each, roughly 10% below the previous close, The Next Web reported. The other $3bn came from RMB 20.14bn of convertible bonds due in September 2027.
Bonds that pay nothing
The bonds carry no coupon and were priced to yield between minus 0.5% and zero, according to The Next Web. Investors are in effect lending Z.ai money for a year at no return, in exchange for the right to convert into its shares at HK$892.50, 25% above the price of the newly placed shares.
That is a bet on the share price. Z.ai listed in Hong Kong in January, and The Next Web says the stock had risen about 2,000% by June.
Where the money goes
About 60% of the proceeds is earmarked for computing infrastructure and research on next-generation models, about 15% for business expansion and strategic investments, and about 25% for working capital, according to the terms reported by All-Weather Media. The company expects to have spent the money by 30 June 2028.
TechNode’s account of the plan is more specific: a fully self-training system, automated generation and filtering of training data, task environments for long-range reasoning, adapting models to domestic chips, and inference optimisation.
The business behind it
Z.ai’s first-half revenue was 954m yuan, up 399.7% from a year earlier, the Seoul Economic Daily reported, with API revenue up more than 27-fold and accounting for 86.5% of the total. The company released GLM-5, 5.1, 5.2 and 5.3 between February and August.
The raise is one of several large ones in China’s AI sector this year. The same report lists MiniMax’s $2bn in July, a $29.6bn syndicated loan for ByteDance, and HK$80bn raised by Alibaba in August for AI infrastructure.
The distillation question
The placement was priced days after US agencies named Z.ai among six Chinese companies they accused of distilling American frontier models at industrial scale. Beijing disputed the allegations. The accusation did not stop investors from buying a bond that pays nothing unless the stock keeps rising.
What to watch
Whether Z.ai’s shares trade above HK$892.50 as the September 2027 maturity approaches, which decides whether the bonds convert into equity or are repaid, and whether the compute spending produces a new flagship GLM model.
