US-based e-commerce retailer Overstock announced on Thursday that GRS Capital, a private equity firm from Hong Kong, will invest up to $270 million in its blockchain unit called tZERO. After the announcement, the stock price rose over 20% in after-hours trading, to $45.40 per share.
The investment will be made based on a total valuation of tZERO at $1.5 billion, which gives GRS Capital an 18% share in Overstock’s blockchain subsidiary. Besides, the private equity firm will buy $30 million worth of tZERO security tokens from the US retailer. The Hong Kong-based firm will invest another $104.55 million in shares of Overstock itself. Thus, the total investment coming from GSR reaches $374.55 million.
tZERO CEO Saum Noursalehi 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,” he added.
At the beginning of July, we reported that tZERO signed a letter of intent with GSR Capital to raise $160 million, with the latter investing the funds in tZERO’s security token offering (STO), a form of fundraising that resembles initial coin offering (ICO) but is compliant with the regulations. However, as we see in the recent announcement, the Hong Kong firm has increased its stake.
According to the agreement, GSR Capital will invest $270 million in up to 18% of tZERO’s equity valued at $1.5 billion, $30 million in tZERO security tokens, and will buy up to 3.1 million shares of Overstock common stock at a 5% discount to the closing price on August 1.
Sonny Wu, the chairman and founder of GSR Capital, commented:
“GSR Capital is very excited to partner with tZERO in its effort to expand the global footprint for blockchain-enabled asset trading including stocks, bonds, commodities, etc. We have a long-term view on how we want to scale this platform on a global basis.”