(Jan 8): Shares of Knowledge Atlas Technology JSC Ltd gained in their Hong Kong debut after a US$558 million ($715.90 million) initial public offering (IPO), making it the first major Chinese generative artificial intelligence (AI) start-up to go public.
The stock rose 13.2% on Thursday to close at HKD131.50 ($21.67), rebounding after a muted open. The company, better known as Zhipu, offered 37.4 million shares at HKD116.20 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 (LLMs) to rival OpenAI Inc and Anthropic PBC — to go public. Yet its gain pales in comparison to the recent IPOs of Chinese hardware makers that drew overwhelming enthusiasm. The contrast reflects the tougher path for software developers, which face fierce competition and price wars, while hardware players like chipmakers are viewed as more central to Beijing’s push for tech self‑reliance.
The muted debut “is less about near-term valuation multiples and more about investor preference at this stage of China’s AI investment cycle”, said Gary Tan, a portfolio manager at Allspring Global Investments. “Domestic hardware plays are seen as offering a more quantifiable, total addressable market and clearer visibility on government support, which makes them more attractive in the near term.”
Beijing still regards LLM providers as strategically important, but the IPO performance gap reflects the market’s current bias towards “tangible infrastructure”, Tan said.
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Beyond questions of whether LLM providers can broaden their user base enough to monetise effectively, they also face significant operational hurdles. US export controls limit access to advanced chips, and they operate with far less capital and computing power than Silicon Valley developers.
“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, theAI 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.
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“We have a positive view of this IPO,” analyst Douglas Kim wrote in a note on Smartkarma, while assigning Zhipu a valuation of HKD223 per share based on a target price-to-sales multiple of 100 times — a 30% 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 Minyue Liu, an associate investment director at Fidelity International.
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 Co also debuted on Thursday, rising 8.4%. Zhipu’s local rival MiniMax Group Inc is set to list on Friday after a US$619 million IPO.
Chip designer Shanghai Biren Technology Co made a strong debut last week, marking the best first-day performance since 2021 among major Hong Kong listings. Moore Threads Technology Co and MetaX Integrated Circuits Shanghai Co also soared on their listing day in Shanghai last month.
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 Ltd, Tencent Holdings Ltd 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.
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The Beijing-based company reported revenue of 312.4 million yuan ($57.28 million) in 2024. Zhipu plans to use 70% 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 Qingyuan Lin wrote in a note. The market has begun “to recognise that China’s AI development is only months behind global leaders”.
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