Nomura Struggles to Selldown Funded $120M 4Y Private Credit Facility for Singapore’s Firmus Tech On Concerns Over U.S.’s GPUs Export Controls

Nomura is struggling to sell down any of its fully funded $120 million, four-year private credit debt facility for Singapore-based AI-focused data center company Firmus Technologies because of concerns by targeted private credit funds over the impact of US export restrictions on high-end GPUs, said two sources familiar with the matter.

A large part of the funding was to finance purchases of US-export-controlled GPUs – including Nvidia’s flagship H100 chips – which Firmus often installs in its modular data center product provided to third parties, the sources said. The US bans the export of those chips to China. Even if the controlled GPUs remain outside China, there is concern the US might crack down on the loophole being used by Chinese companies of leasing processing capacity offshore, they said.

Firmus is providing its so-called “Hypercubes” to data center facilities in Singapore, India and Australia as infrastructure-as-a-service, according to the new reports.

The four-year private credit facility is offering SOFR+ 10-11%, said the two sources, who didn’t elaborate on the seniority or other features of the loan.

A source close to the deal maintained that the loan has attracted “strong interest” from some investors, though they are indeed evaluating end-use concerns and increased headline volatility around the space.

The same source clarified that Nomura is also helping Firmus to raise $250 million equity to fund medium to long-term growth plans. The Australian Financial Review, or AFR, reported on Sept. 14, 2024 that Nomura was running a process at the time to raise $400 million equity and $550 million debt for Firmus.

US President Donald Trump’s administration has been threatening increasingly aggressive controls over China’s access to the critical chips.

Bloomberg reported today, Feb. 26, that the Trump administration is looking to expand efforts that commenced under the Biden administration to control semiconductor exports, and is pressuring allies to strengthen their own restrictions on China’s semiconductor industry.

As an October 2024 blog on the website of cross-border technology compliance and logistics company tecex notes, a black market trade has flourished in Nvidia’s flagship H100 AI chip, which has “never legally set foot in China.” The older A100 chip was available for a short time in China before a 2022 export ban, but servers and processors have been shipped since then through Malaysia, Japan and Indonesia into Hong Kong before travelling into Shenzhen in mainland China.

The same blog notes that Chinese companies have been able to purchase chips before sending them to China by establishing entities abroad.

While the black market trade in Nvidia chips and the use of rented servers show how hard it is for the US to enforce its export controls outside its own domain, in the current climate of increasingly aggressive sanctions and tariffs, there may be eventual repercussions for anyone even inadvertently funding the purchase of controlled chips which end up being used to breach sanctions.

“I wouldn’t even put this deal in front of my investor committee,” said one of the sources.

Firmus Background

Firmus operates data centers and provides a technology which sustainably cools their energy intensive operations. The technology emerged from an original attempt to cool down bitcoin mining computers, at a time when a spike in energy prices made the mining commercially unviable.

The application of the technology not only made the crypto mining commercially viable, it spawned a business which relocated from its origin in Australia to the Asian data center hub of Singapore, as immersion cooling for computing — particularly in the advent of increased AI training and modelling – has a natural application in the energy intensive data center sector.

Firmus has partnerships with Nvidia, Dell and others, according to its website.

In 2023, it formed a partnership with the Singapore sovereign fund Temasek’s ST Telemedia Global Data Centres (STT GDC), according to a June 22, 2023 media statement from STT GDC. The announced “significant investment” into a global venture with Firmus “aims to provide cost-effective, large-scale and sustainable GPU and AI cloud services for the AI and visual computing era”, according to the announcement.

The Singapore-based venture, to be known as Sustainable Metal Cloud, or SMC, would leverage Firmus’ scaled, immersion-cooled platform – known as the ‘Hypercube’ – hosted in STT GDC locations. The high-performance AI clusters, which include GPUs and high-speed networking from NVIDIA, the announcement states.

According to the AFR’ Sept. 14, 2024 article, STT GDC invested $100 million to roll out Firmus’ cooling technology in its 60 data centers in the previous year, which cut their power consumption in half. The same article notes that the Singapore government had throttled back on power provided to the data centers located in the city due to their excessive power consumption.

The AFR article reported that Nomura was running a process at the time to raise $400 million equity and $550 million debt for Firmus, and that the transaction could value the company at $1.2 billion, or more than four times the price its shares had traded in the private market. However, the source close to the matter said that the equity amount being raised is only $250 million.

The same article also notes that one of Firmus three co-founders, Oliver Curtis, had previously served a one-year jail sentence in Australia after being convicted for insider trading. Curtis invested 250,000 Australian dollars into Firmus, the same report adds.

Among Firmus’ equity investors are Australasian fund manager Archibald Capital and Melbourne-based investment manager TIGA Trading, according to the AFR.

Nomura declined to comment. Firmus and STT GDC did not respond to emailed requests for comment.