Chinese companies are raising more equity capital through follow-on deals, a trend fueled in recent weeks by a slew of tech players seeking funds for artificial intelligence expansion.

With Hong Kong’s IPO market booming, the value of follow-on deals in the first half of 2026 surpassed that of IPOs, reaching USD 37.9 billion, including both share placements and convertible bond issuances, according to Hong Kong Stock Exchange (HKEX) data. That is the highest level in five years.

Jumbo deals have also become more common, with 11 follow-on moves surpassing USD 1 billion each in the first half of the year, more than double the number in the first half of 2025.

Beijing-based Z.ai, formerly known as Zhipu, is raising as much as HKD 15.7 billion (USD 2 billion) through a share placement and has also sold another USD 3 billion worth of convertible bonds, according to an exchange filing on September 13. The company is issuing up to 21,965,000 shares at a price of HKD 714 (USD 91) per share, representing a 9.96% discount to its closing price on September 11.

The convertible bonds are zero-coupon bonds due next September, with a conversion price of HKD 892.5 (USD 114). Investors can convert the bonds into stocks on or after July 1, the terms show. If fully converted, they would represent around 5.66% of the company’s total shares in circulation.

“This is another example of increasingly aggressive fundraising across China’s AI sector,” according to a Merrill Lynch analyst note. With capital increasingly concentrated among winners, “first movers in fundraising may gain an advantage in compute acquisition,” it added.

The Z.ai deal is the second share sale by the AI company in less than two months, despite lackluster secondary market performance. Z.ai raised HKD 31.4 billion (USD 4 billion) in July at a price of HKD 1,588 (USD 202) per share. Its stock price has tumbled by over 40% since the end of July, as investors turned sour on AI companies’ valuations amid persistent losses and intensifying competition.

Last month, Chinese video streaming platform Bilibili raised USD 700 million through equity placement and convertible bonds that will be partly used to fund the company’s AI initiatives. In August, tech giant Alibaba sealed a record $10.2 billion share placement deal that sent its shares tumbling on the same day. Z.ai competitor MiniMax also raised around USD 2 billion through a share placement and convertible bond sale in July.

“Issuers are combining equity and equity-linked products to raise capital from different investor groups while managing financing costs and potential dilution,” HKEX said in a note published last month.

The use of convertible bonds has become increasingly popular among Chinese companies in recent years as a major fundraising channel, with issuance volume hitting a record USD 18.3 billion in the first half of 2026. Unlike regular senior bonds that bear interest, convertible bonds can be issued at close-to-zero or zero interest rates by offering potential upside through stock conversion.

Investment bankers in Hong Kong said that some convertible bonds have even achieved negative yields, meaning that investors are willing to pay a premium to hold the bonds in exchange for equity gains.

“Given investors typically dislike equity placements due to immediate dilution,” the Merrill Lynch report said convertible bonds will become “a more popular fundraising vehicle across the sector.”

As Z.ai and MiniMax are not yet profitable, they cannot tap the bond market in the same way as tech companies such as Tencent, which sold USD 4.6 billion in dual-currency bonds earlier this year.

Z.ai said that around 60% of the proceeds raised through its placement and convertible bonds will be used to develop its foundation AI models and self-training system, while the rest will go toward expansion and investments as well as replenishing working capital.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.

Note: HKD figures are converted to USD at rates of HKD 7.84 = USD 1 based on estimates as of September 24, 2026, unless otherwise stated. USD conversions are approximate and, where appropriate, rounded for ease of reference. They may not fully match prevailing exchange rates.