SGT Capital Pte. Ltd agreed to acquire German Startups Group GmbH & Co. KGaA (XTRA:GSJ) for $86 million in a reverse merger transaction on July 15, 2020.

To realize the transaction, GSG acquires SGT Capital Pte. Ltd. against the issue of 50 million new GSG shares, under exclusion of subscription rights of existing shareholders, and against the issue of a mandatory convertible bond, which will be converted into a further 1 million to 103 million new GSG shares depending on the fund volume raised until December 31, 2022. Therefore, the new shares to be issued will be fully subscribed by SGT Capital LLC and not be placed in the market.

In the base case scenario of a fund volume of $1 billion, the contributors will thus receive a total of 51 million GSG shares, with $2 billion they will receive 92.8 million GSG shares, and a maximum of 153 million GSG shares in the best case scenario of a fund volume of $3.5 billion. The nominal amount of the mandatory convertible bond not converted into shares by January 31, 2023 will expire without payment. With the chosen mechanism, the contributors as well as the existing shareholders of GSG will benefit from any exceeding of the minimum target volume of $1 billion.

Long-term lockups were agreed for the majority of the new GSG shares. Thus, a maximum of 4.5 million new GSG shares may be sold until June 30, 2022 and a maximum of 20 million new GSG shares until June 30, 2025. GSG's general partner German Startups Group Management GmbH will then change its name to SGT German Private Equity Management GmbH and a 75% stake will be sold by its sole shareholder, Gerlinger & Partner GmbH, to SGT Capital LLC, in which Gerlinger & Partner GmbH, in turn, holds a minority stake.

Christoph Gerlinger will remain Managing Director of the General Partner in the new structure, and the entire team of GSG will stay employed. The international management team of the merged company consists of one American, one Australian and four Germans. The merged company will move its registered office to Frankfurt am Main.

The deal is subject to the approval at German Startups Group GmbH & Co. KGaA's shareholders meeting on August 7, 2020. As on August 7, 2020, the transaction has been approved by the shareholders of German Startups Group.

No action for annulment has been filed within the applicable period. This clears the way for the merger. Thorsten Kuthe, Uwe Hartmann, Gero Lingen and Stefan Westerheide of Heuking Kühn Lüer Wojtek acted as legal advisors to German Startups Group GmbH & Co.

KGaA.