GSR Capital to Invest as Much as $400 Million in tZero and Overstock Forcing the Shares Soar

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by Darya Rudz · 3 min read
GSR Capital to Invest as Much as $400 Million in tZero and Overstock Forcing the Shares Soar
Photo: / Flickr

Hong Kong-based equity firm GSR Capital has agreed to invest as much as $400 million in tZero and Overstock. After the announcement, Overstock shares soared by 21 percent in after-hours trading.

GSR Capital, a Hong Kong based private equity firm, has announced that it will invest up to $270 million into Overstock’s blockchain subsidiary tZero.

Overstock is a tech-driven online retailer located near Salt Lake City. Since its beginnings in 1999, Overstock has evolved from a fledging startup to a billion-dollar online retailer as a result of a hard-working and creative team. Its subsidiary tZero focuses on the development and commercialization of financial technology based on cryptographically-secured, decentralized ledgers. Since its inception, tZERO has pioneered the effort to bring greater efficiency and transparency to capital markets through the integration of blockchain technology.

The ICO of tZero opened in December of last year and raised $100 million in the first day of funding. The maximum amount of tokens is limited to $250 million. On August 6, tZero announced that its Security Token Offering (STO) conducted in the form of ICO was coming to an end, with no further extensions. The results were revealed on August 9.

After the announcement made by GSR Capital, Overstock shares jumped as much as 21 percent in after-hours trading on Thursday.

On June29, tZero announced that it had signed a letter of intent with GSR Capital for a purchase of $160 million in tZero Security Tokens at a price of $10.00 per token, pursuant to the Simple Agreement for Future Equity (SAFE). Beyond the recent $270 million investment for an 18% stake in the tZero platform for trading securities issued on a blockchain, GSR Capital confirms it will spend up to $104.55 million for about 3.1 million shares of stock, or about a 10% in the U.S.-based company. These shares will be purchased at a five percent discount to the closing share price on August 1, 2018. The total investment in tZero could reach $404 million and would give the company a valuation of $1.5 billion, if the deal closes on December 15.

Moreover, Overstock and GSR Capital have also signed a purchase agreement according to which GSR Capital will buy $30 million in tZero Security Tokens from Overstock. Saum Noursalehi, tZero CEO, commented on the deal:

“We are honored to have GSR Capital as a strategic investor. The tokenization of securities has the potential to disrupt global capital markets responsible for moving hundreds of trillions of dollars. Together with our partners, we will globalize our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets.”

According to Patrick Byrne, tZero executive chairman and CEO of Overstock, tZero is planning to use the money raised to help launch multiple tokenized securities exchanges around the world in parallel with its SEC-licensed U.S. operation. “Ultimately, the nature of these tokens, they can be cross-listed across exchanges in every jurisdiction,” Byrne said. “And that’s really the vision on a global scale.”

Sonny Wu, GSR Capital’s chairman and founder, added: “We have a long-term view on how we want to scale this platform on a global basis.”

Previously, GSR Capital focused on electric vehicles and clean energy, and this this is it’s first public investment in blockchain, which seems to be the largest ever single investment in a blockchain startup.

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