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Abu Dhabi AI giant G42’s investment in Cerebras Systems is finally going through, after Cerebras said G42 will buy non-voting shares in the company, making it unnecessary for the Committee on Foreign Investment in the United States (CFIUS) to clear the transaction, according to the company’s prospectus. This should make way for the Nvidia rival’s IPO, which had been delayed for months due to the pending review.
What we know: Cerebras and G42 had given voluntary notice to CFIUS about the sale of voting shares, according to the California-based company’s IPO prospectus. While G42 initially agreed to buy USD 335 mn worth of Cerebras shares by April 15, according to the prospectus, the two companies later changed the agreement to say it would be buying non-voting shares, meaning they can now withdraw their notice since that did not require a CFIUS review.
Background: The CFIUS had been weighing concerns over the group’s past ties with China’s Huawei, despite G42 signing a US national security agreement to sever ties with Huawei and divest all of its Chinese investments. A listing could raise as much as USD 1 bn at a USD 7-8 bn valuation, Bloomberg has reported.
How much does G42 own of Cerebras? The company acquired a 1% stake in Cerebas in 2021 through an affiliate for USD 40 mn. They later signed a convertible purchase agreement to acquire another 22.9 mn shares for USD 335 mn, and under certain circumstances, will have the option to acquire additional shares at a 17.5% discount to the fair market value of its Class A stocks at the time the agreement was inked.
Their relationship goes deeper than just that of a shareholder and its subsidiary: G42 accounts for some 87% of Cerebras’ revenues in 1H 2024, the company said in the prospectus. The UAE firm is supplying G42 with data center space, computing clusters, and other services under mult-bn-USD contracts.
What they said: “We thank @POTUS for making America the best place in the world to invest in cutting-edge #AI technology,” Cerebras’ Founder and CEO Andrew Feldman said in a LinkedIn post. “We thank G42's leadership and the UAE's leadership for their ongoing partnership and commitment to supporting US headquartered AI companies,” he added.
