China’s OpenAI rival Zhipu rises after $715 million IPO

SHANGHAI - Shares of Knowledge Atlas Technology gained on their Hong Kong debut, following a US$558 million (S$715 million) initial public offering (IPO) that made it the first major Chinese generative artificial intelligence (AI) start-up to go public.

The stock rose as much as 16 per cent on Jan 8 to HK$135, rebounding after a muted open. The company, better known as Zhipu, offered 37.4 million shares at HK$116.20 apiece to investors last week. Its shares allocated to retail investors were subscribed by more than 1,159 times.

Zhipu is the first of China’s “AI tigers” – start-ups building large language models to rival OpenAI and Anthropic – to go public. Its listing offers an early test of whether markets view these firms as credible challengers to US counterparts.

Despite strong investor interest in AI overall, Chinese software makers face unique operational hurdles, from US export controls that limit access to advanced chips to operating with far less capital and computing power than Silicon Valley developers.

Chinese hardware makers have fared well in recent IPOs, supported by localisation demand that brightens the outlook for domestic chip and equipment suppliers. By contrast, Chinese software start-ups, especially in generative AI, encounter greater scepticism as they work to broaden their user base while contending with intense competition from both global rivals and local peers.

“The Chinese market is hyper-competitive, which naturally drags prices down to these levels,” Zhipu co-founder and chairman Liu Debing said in an interview with Bloomberg TV. “But as we compete globally, international users will undoubtedly recognise the value.”

Chinese companies’ prospects in international competition are underscored by their valuation gap with US peers. Anthropic, the AI start-up behind the chatbot Claude, is raising a new round of funding that would value the company at US$350 billion before the new investment. 

“We have a positive view of this IPO,” analyst Douglas Kim wrote in a note on Smartkarma, while assigning Zhipu a valuation of HK$223 per share based on a target price-to-sales multiple of 100 times – a 30 per cent discount to the peer average. 

Investor interest in the sector – while still robust as China continues to strengthen domestic capabilities – “has been accompanied by an ongoing debate around the risk of an AI-related market bubble,” said Fidelity International associate investment director Liu Minyue. 

Zhipu’s listing comes as Chinese semiconductor firms – a key component in the AI supply chain – are rushing to raise funds. Graphics processing units maker Shanghai Iluvatar CoreX Semiconductor also debuted on Jan 8, rising as much as 33 per cent. Zhipu’s local rival MiniMax Group is set to list on Jan 9 after a US$619 million IPO.

Chip designer Shanghai Biren Technology made a strong debut last week, marking the best first-day performance since 2021 among major Hong Kong listings. Moore Threads Technology and MetaX Integrated Circuits Shanghai also soared on their listing day in Shanghai in December. 

Zhipu’s market capitalisation of US$6.6 billion based on the issue price values the company lower than chipmakers Biren, Moore Threads and MetaX. 

Zhipu, founded in 2019 by researchers from China’s Tsinghua University, is celebrated as a pioneer in the nation’s AI industry. It is backed by Alibaba Group Holding, Tencent Holdings and several local government funds.

That support helped the company win contracts from state-owned enterprises, which prefer building customised AI infrastructure rather than tapping public cloud services. Zhipu mainly serves domestic institutions.

The company reported revenue of 312.4 million yuan (S$57.3 million) in 2024. Zhipu plans to use 70 per cent of the IPO proceeds towards research and development of its general-purpose large AI models, according to its prospectus.

“China AI was the new narrative in 2025 and will likely be even stronger in 2026,” Sanford C. Bernstein’s analysts, led by Dr Qingyuan Lin, wrote in a note. The market has begun “to recognise that China’s AI development is only months behind global leaders”. BLOOMBERG