Zhipu Surges 22% After $4 Billion Share Sale Priced at Low End

Shares in Chinese artificial-intelligence model maker Zhipu surged as much as 22% in Hong Kong on Thursday after the company priced a $4 billion share sale at the low end of the marketed range.

The stock soared despite the 13% discount to the previous close in the placement, which is more than six times the size of the company’s initial public offering in December. Zhipu is now up about 1,700% since its debut.

“Investors are increasingly convinced that Zhipu’s LLM is a market leader and gaining ground on competitors. The successful placement demonstrates investor confidence and provides funds for further growth,” said Vey-Sern Ling, managing director at Union Bancaire Privee in Singapore.

Zhipu, which trades as Knowledge Atlas Technology, is selling as many as 19.8 million new shares at HK$1,588 apiece, according to a filing to the Hong Kong stock exchange on Thursday. The company marketed the placement at a range of HK$1,588 to HK$1,698 per share, according to terms of the deal that confirmed a previous Bloomberg News report.

Read More AI Firm Zhipu to Sell $4 Billion of Shares After 1,500% Rally

The company plans to use the proceeds for research and development, business expansion, investments, and mergers and acquisitions. It also seeks to optimize its capital structure, working capital and other general corporate purposes.

Zhipu moved ahead with the offering after about 25.68 million shares held by cornerstone investors were released from a six-month lockup period on Wednesday. Those shareholders, mostly state-backed institutions, pledged to hold the company’s shares even after the expiry. About 40% of the company’s total issued shares will only be released in January next year, leaving the number of free-floating shares limited.

Zhipu has been one of the few Chinese AI model developers that was able to keep raising prices for its token while maintain user traffic. The firm recently launched its GLM-5.2 AI model and is making the technology free and open for anyone to build upon, expecting to attract developers to its platform and embed its tools into the global market.

China International Capital Corp. is the sole overall coordinator on the deal.