News Release Highlights: Alset has provided a $3.7 million secured loan to Cedarcross for the purchase of 10 Nvidia H100 HGX 8GPU servers. These
News Release Highlights:
- Alset has provided a $3.7 million secured loan to Cedarcross for the purchase of 10 Nvidia H100 HGX 8GPU servers. These servers are capable of 700,000 compute hours per year.
- Cedarcross, a company in Alset’s portfolio, aims to become a leading AI cloud computing provider. They plan to grow aggressively, using their industry network and capital.
- At a rate of $2.80 per chip hour, the 10 Nvidia H100 HGX 8GPU servers can generate approximately $2 million in compute leasing revenue annually. This is expected to result in a net gross margin of around $1.6 million per year.
- With the rising demand for AI infrastructure, Alset is one of the first publicly listed companies with exposure to an AI computing hub. This hub is fully installed and operating in a Tier 3 data center, thanks to Alset’s 49% ownership stake in Cedarcross.
VANCOUVER, British Columbia – April 2, 2024 – Alset Capital Inc. (TSX-V:KSUM) (FSE:1R60, WKN:A3ESVQ) (“Alset” or the “Company”) is excited to announce its recent secured loan agreement (the “Loan Agreement”) with Cedarcross International Technologies Inc. (referred to as “Cedarcross”) for a significant principal amount of $3,700,000 (the “Loan”). This funding will be utilized to acquire 10 Nvidia H100 HGX 8GPU servers, enhancing the Company’s capacity to lease 700,000 compute hours. In addition to this financial update, the Company is delighted to share the latest corporate and operational developments from its investee company, Cedarcross.
Cedarcross Corporate & Operational Update
Cedarcross aims to position itself as one of Canada’s foremost providers of high-performance AI computing.
The company’s goal is to democratize access to this cutting-edge technology by providing venture-backed, telecommunications, and similar companies with access to leading Nvidia hardware. With access to the world’s fastest AI computing servers, Cedarcross is at the forefront of what could be considered a new era of technological advancement, potentially heralding the next industrial revolution. Upon completion of Cedarcross’s purchase order, its fleet of 10 H100s will be capable of 700,000 compute hours per annum.
Out of the ten servers, five have already arrived and are now configured in a Tier 3 data center situated in Vancouver, British Columbia. This data center is owned and operated by a prominent North American provider, boasting an extensive network of over 40+ facilities across key markets. Equipped with features such as fiber optic connectivity, UPS backup, and localized computing capabilities, the data center enables Cedarcross to provide high-speed connectivity to better serve its clients.
Cedarcross’s strategy includes facilitating the training of AI models, Large Language Models (“LLM”), and other advanced computing workloads. The company plans to scale its hardware infrastructure fleet to meet the evolving market demand for compute power. Through its industry-leading partnerships, Cedarcross is positioned to drive streamlined growth and innovation within the AI sector.
The initial AI computing hub of 5 Nvidia H100 HGX servers is fully installed, interconnected using the Infiniti brand network. Each server is connected to eight 400GB optical modules, ensuring optimal efficiency between them. Cedarcross expects the receipt and installation of the additional five Nvidia HGX H100 GPU servers in the coming weeks.
Cedarcross has a comprehensive understanding of the lead time and execution required to build AI computing hubs, extending beyond the mere acquisition of GPU servers. Over the last several months, the company has diligently sourced, ordered, set up, and initiated this AI computing hub. Powered by the Nvidia HGX H100 8GPU servers, Cedarcross boasts a GPU infrastructure that, when fully delivered and installed, is expected to generate approximately USD ~$2 million per annum, with associated anticipated net cash inflows of USD ~$1.6 million per annum.
Alset Capital’s Management Commentary
In the process of structuring the Loan, Alset’s management and board of directors analyzed comparable transactions within the AI sector. This included reviewing Magnetar Capital’s and Blackstone’s $2.3 billion debt facility provided to CoreWeave in 2023, which was secured by Nvidia GPUs.
“The strategic alliance and loan between Alset and Cedarcross signifies our commitment to fostering innovation in the AI sector,” said Morgan Good, CEO of Alset. “By providing Cedarcross with the necessary financial support, we aim to facilitate the growth of cutting-edge technologies that have the potential to revolutionize a multitude of industries.”
The global cloud AI market is forecasted to expand from $60.35 billion in 2023 to $397.81 billion by 2030, representing a CAGR of 30.9% during the forecast period.
In a recent interview, Sam Altman, the CEO of OpenAI, discussed the future of technology and highlighted the critical role of computing power. He posited that “compute” will become the “currency of the future,” surpassing traditional fiat or cryptocurrency. Altman, speaking on the Lex Fridman Podcast, emphasized his belief that “compute” will emerge as the most valuable commodity globally. He emphasized the necessity of significant investments to enhance computing capabilities. Altman drew parallels between the market for computing chips and that of mobile phones, pointing out that the demand for compute will be fundamentally different. He suggested that predicting the world’s need for compute will be challenging and heavily influenced by technology prices.
Transaction Overview
Alset has entered into an agreement to provide a $3,700,000 secured loan to Cedarcross. This Loan will be secured against all present and future assets of Cedarcross, including specific asset security against five Nvidia 8GPU HGX H100 Servers. Repayment of the Loan in full is due on July 1, 2025 (the “Maturity Date”), with interest accruing at a rate of 15% per annum. Interest payments are scheduled quarterly, with the first payment due on July 1, 2024.
In conjunction with the Loan Agreement, Cedarcross has executed a general security agreement with the Company to secure its obligations and comply with all covenants and agreements outlined in the Loan Agreement. This agreement grants the Company a security interest in specific property of Cedarcross. It’s important to note that the Company is not issuing any securities or paying any bonuses, commissions, or finder’s fees related to this loan.
With a 49% ownership stake in Cedarcross, the Company is considered a “related party” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Therefore, this Loan constitutes a “related party transaction” as defined by MI 61-101. The Company is relying on exemptions from valuation requirements and minority approval under subsections 5.5(a) and 5.7(a) of MI 61-101, respectively. This is because the principal amount of the Loan does not exceed 25% of the Company’s market capitalization, as determined in accordance with MI 61-101.
The approval of the Loan Agreement is subject to review and acceptance by the TSX Venture Exchange.
1 Reuters
3. Tradingview
On behalf of Alset Capital Inc.
“Morgan Good”
Morgan Good
Chief Executive Officer
About Alset Capital Inc.
Alset Capital Inc. is an investment issuer that is focused on investment in diversified industries such as technology, healthcare, industrial, special situations, operating businesses through both debt and equity using cash resources or shares in its capital. The Company is led by an experienced, entrepreneurial group of executives having a diverse industry and capital markets background.
About Cedarcross Technologies Inc.
Cedarcross is an Artificial Intelligence cloud computing provider, with a vision of becoming one of Canada’s largest AI compute providers. The Company is dedicated to democratizing access to cutting-edge AI computing, offering access to the world’s fastest AI servers powered by Nvidia’s H100 HGX 8GPU Servers. Focused on leasing compute resources to enterprise clients, Cedarcross anticipates significant revenue growth.
For further information about Alset Capital Inc., please contact:
Morgan Good, CEO and Director
T: 604.715.4751
E: morgan@alsetai.com
Cautionary Note regarding Forward Looking Statements
Certain statements in this press release may contain forward-looking information (within the meaning of Canadian securities legislation), including, without limitation, the intended use of the Loan, the anticipated growth of the global cloud AI market and the review and acceptance of the TSX Venture Exchange. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties, and other factors, which may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the statements. Forward-looking statements speak only as of the date those statements are made. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include regulatory actions, market prices, and continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. Forward-looking statements are based on the beliefs, estimates and opinions of the Company’s management on the date the statements are made. Except as required by applicable law, the Company assumes no obligation to update or to publicly announce the results of any change to any forward-looking statement contained or incorporated by reference herein to reflect actual results, future events or developments, changes in assumptions, or changes in other factors affecting the forward-looking statements. If the Company updates any forward-looking statement(s), no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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