News Release Highlights:
- Alset provides $3.7 million secured loan to Cedarcross to purchase 10 Nvidia H100 HGX 8GPU servers capable of 700,000 compute hours per annum.
- Alset’s portfolio company, Cedarcross, aims to become leading AI cloud computing provider, planning to leverage industry network and capital to grow aggressively.
- At a billable rate of USD $2.80 per chip hour, 10 Nvidia H100 HGX 8GPU servers are capable of compute leasing revenue of approx. USD $2 million per annum, with associated anticipated net gross margin of approx. USD $1.6 million per annum.
- With the rapid ascent in deploying AI infrastructure, Alset stands out as one of the first publicly listed companies with exposure to an AI computing hub fully installed and operating in a Tier 3 data center, through its 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 pleased to announce it has entered into a secured loan agreement (the “Loan Agreement”) with Cedarcross International Technologies Inc. (the “Cedarcross”) with respect to a loan for a principal amount of $3,700,000 (the “Loan”), to purchase 10 Nvidia H100 HGX 8GPU servers capable of leasing 700,000 compute hours. The Company is also pleased to share a corporate and operational update from its investee company Cedarcross.
Cedarcross Corporate & Operational Update
Cedarcross’s vision is to become one of Canada’s largest high-performance AI computing providers.
Cedarcross’s mission is to democratize access to high-performance AI computing through offering Venture-backed, telecommunications, and other such companies with access to leading Nvidia hardware. Cedarcross offers access to the world’s fastest AI computing servers, which are arguably heralding a new era of technological advancement, and as such, 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.
Five of the ten servers have arrived and are configured in a Tier 3 data center located in the Vancouver, British Columbia. The data center is owned and operated by a leading North American data center provider, boasting an extensive network of over 40+ facilities across key markets. The data center offers Cedarcross essential features such as fiber optic connectivity, UPS backup, and localized computing capabilities, which facilitates high speed connectivity to better serve its clients.
Cedarcross plans to facilitate the training of AI models and Large Language Models (“LLM”), and other such advanced computing workloads. Cedarcross aims to scale its hardware infrastructure fleet to meet evolving market demand for compute. Leveraging its industry-leading partners, Cedarcross is poised to drive streamlined growth and innovation in the AI sector.
Cedarcross’s initial AI computing hub of 5 Nvidia H100 HGX servers is fully installed and are interconnected using the Infiniti brand network. Each server is linked to eight 400GB optical modules, ensuring optimal efficiency between the servers. Cedarcross expects receipt and installation of the additional five Nvidia HGX H100 GPU servers in the coming weeks.
Cedarcross has the foresight and knowledge of the lead time and execution required to build AI computing hubs, extending beyond simply the acquisition of GPU servers. Over the last several months, Cedarcross has worked to source, order, set up, and initiate this AI computing hub. Powered by the Nvidia HGX H100 8GPU servers, Cedarcross boasts GPU infrastructure that when fully delivered and installed, is expected to immediately start to generate USD ~$2 million per annum, with associated anticipated net cash inflows of USD ~$1.6 million per annum.
Alset Capital’s Management Commentary
In consideration of the structuring of the Loan, Alset’s management and board of directors reviewed arguably similar transactions in the AI sector including Magnetar Capital’s and Blackstone’s $2.3B debt facility provided to CoreWeave in 2023, which facility was secured by Nvidia GPUs.1
“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 size is projected to grow from $60.35 billion in 2023 to $397.81 billion by 2030, at a CAGR of 30.9% during the forecast period.2
In a recent interview, Sam Altman, the CEO of OpenAI, shared his thoughts on the future of technology, emphasizing the significance of computing power. He thinks “compute” will be the “currency of the future” instead of fiat or cryptocurrency king. Altman, in a conversation on the Lex Fridman Podcast, expressed his belief that “compute” will become the most valuable commodity in the world. He stressed the need for substantial investments to increase computing capabilities. Altman compared the market for computing chips to that of mobile phones, noting that the demand for compute will be significantly different. He suggested that the world’s need for compute will be difficult to predict and that the price of the technology will heavily influence it.3
Transaction Overview
Alset has agreed to provide a $3,700,000 secured loan to Cedarcross. The Loan will be secured against all present and after acquired property of Cedarcross, including specific asset security against five Nvidia 8GPU HGX H100 Servers. The Loan is repayable in full on July 1, 2025 (the “Maturity Date”) and will bear interest at a rate of 15% per annum. Interest is payable every quarter with the first payment due July 1, 2024.
As security for the payment of the Cedarcross’s obligations and fulfilment and satisfaction of all covenants and agreements made under the Loan Agreement, Cedarcross has, concurrently with the Loan Agreement, entered into a general security agreement with the Company pursuant to which the Cedarcross granted the Company a security interest in specific property of the Cedarcross. The Company is not issuing any securities, or paying any bonus, commission or finder’s fees on the loan.
The Company has a 49% ownership stake in Cedarcross and is a “related party” of the Company within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). As such, the Loan constitutes a “related party transaction” within the meaning of MI 61-101. The Company is relying on the exemption from valuation requirement and minority approval pursuant to subsection 5.5(a) and 5.7(a) of MI 61-101, respectively, as the principal amount of the Loan does not represent more than 25% of the Company’s market capitalization, as determined in accordance with MI 61-101.
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
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.
