Z.ai shares tumble over 10% after $5 billion fundraising, its second major raise in two months

Shares of Chinese artificial intelligence company Z.ai tumbled more than 10% on Monday after the company announced plans to raise about $5 billion through a new share placement and convertible bond sale, marking its second major fundraising in two months.

The Beijing-based company plans to issue up to 21.97 million new shares at HK$714 each, raising gross proceeds of about HK$15.68 billion ($2 billion). The placement price represents a 10% discount to Z.ai's Friday closing price of HK$793.

Separately, Z.ai plans to issue 20.14 billion yuan ($3 billion) in zero-coupon convertible bonds due in 2027. The bonds will initially be convertible at HK$892.50 per share, a 12.5% premium to Friday's closing price.

The company said proceeds from the fundraising will support the development of its next-generation AI models, including research and development, training and inference infrastructure, and commercialization.

The latest fundraising comes just two months after Z.ai raised about $4 billion through a share placement in July.

Last month, Z.ai shares jumped after the company launched a new AI model that it said runs entirely on Chinese-made chips. The company claimed it used 100,000 domestically made chips to handle online requests for the model.

Shares of its domestic rival MiniMax were also down, falling about 5% on Monday.

— CNBC's Evelyn Cheng contributed to this report