Hong Kong-based private equity firm GSR Capital recently announced that it will invest $270 million in a blockchain-based startup of Overstock.com (NASDAQ:OSTK) . A press release published by the American internet retailer confirmed that GSR Capital is planning to add around $30 million to its initial amount of investment in the ICO of tZero, a subsidiary of Overstock.com.
If the Chinese private equity company seals the deal it will be one of the largest ever single investments made by a company in a blockchain startup. Immediately after this announcement by Overstock, the stock price of tZero shot up by over 20% and went up to $45.40/share.
Unusual structure of Overstock & GSR Capital deal
With the $270 million investment, GSR Capital will acquire a stake of 18% in the platform of tZero for securities issued on the blockchain platform. As per the report, the Chinese firm is planning to spend around $104.55 million for approximately 3.1 million shares of the U.S.-based company. The additional investment of $30 million will be a part of an initial coin offering (ICO) of tZero which will raise the total amount of the ICO sale to $134 million.
If considered collectively, the complete investment will go above $404 million. It will also increase the valuation of tZero to $1.5 billion. Most probably the deal will close on December 15, 2018, according to plan. The CEO and executive chairman of tZero, Patrick Byrne said that the deal is similar to a wedding cake. Both the companies have signed independent letters of intent. The first letter is signed between Overstock and GSR Capital and the second one is signed between tZero and GSR Capital.
Overstock to add three more partners to tZero platform
Three more investors from the Middle East and Asia may soon join tZero’s platform. tZero has its headquarters located in Salt Lake City, Utah and has acquired a license from the U.S. Securities & Exchange Commission (SEC). According to Byrne ”U.S. capital is, to be honest; they’re gun-shy on this whole blockchain issue. And I’m sorry to say the U.S. is not the leading country in the world.”