GSTechnologies Limited (LON:GST), the fintech company, has announced that the Company has entered into an agreement to acquire 66.67% of the issued share capital of Semnet Pte Ltd, a cybersecurity company based in Singapore, for a total consideration of US$1.8 million, payable through US$0.8 million in cash and US$1.0 million in new shares in the Company, as detailed below.
Semnet is a profitable cybersecurity business that will provide the Company with expertise and licences that the Directors believe are a critical component to the advancement of the Company’s GS Money and B2B Neobanking operations. Cybersecurity is of particular importance to the Company’s developing global Neobank ecosystem which has recently been enhanced by the acquisition of PAYPT finance Ltd, now renamed Angra Global, as announced on 15 August 2023.
Angra Global started onboarding customers on 1 September 2023 and Semnet’s cybersecurity expertise will enable the Company to build a dedicated cybersecurity team to support client onboarding and its operational activities, including the wider provision of white-label software solutions to global money service businesses. In addition, Semnet will continue to support and grow its client base in other sectors, providing an additional profitable revenue stream for the Group. Semnet is licensed by the Cyber Security Regulatory Office (CRSO) in Singapore.
Further details of the Acquisition
The Company has entered into the Agreement to acquire 66.67% of the issued share capital of Semnet from two of Semnet’s directors, Choo Seet Ee and Zheng Kang Wen Mervyn, for a total consideration of US$1.8 million in cash and new shares of no par value in the Company. Completion of the Acquisition is subject, inter alia, to the agreement of a completion assets statement, which may require adjustment of the consideration upwards or downwards, and no material adverse change having occurred in the Semnet business. Completion is expected to occur two months following the entering into of the Agreement, or earlier as may be agreed between the parties.
US$800,000 of the total consideration payable to the Sellers is payable in cash and the remaining US$1.0 million through the issue of new Ordinary Shares. US$80,000 of the Cash Consideration has been paid and the remaining US$720,000 is payable as to US$500,000 on Completion and the remaining US$220,000 is payable four months from Completion. Should Completion of the Acquisition not occur the Company is entitled to the return of the US$80,000 consideration already paid if it has fulfilled its obligations under the Agreement.
The Company will issue the Consideration Shares on the nine month anniversary of Completion, or on any earlier date designated by the Company giving not less than seven days’ notice in writing to the vendors, at a price per Ordinary Share equal to the average of the middle market quotations for a Consideration Share as shown by the daily Official List of the London Stock Exchange for the last five full trading days immediately preceding the payment date.
The remaining 33.33% outstanding shares in Semnet are owned by Ong Siew Phek (23.33%) and Lam Pek San (10%). Ong Siew Pek is the spouse of the Company’s Executive Director and CEO, Jack Bai. As Ong Siew Pek is a related party of a director of the Company, the Company considers the Acquisition to be a Material Related Party Transaction as defined under DTR 7.3.6. The Company’s Executive Director and CEO, Jack Bai, has therefore not participated in the GST Board resolution to approve the Acquisition and the Company’s independent directors consider that the terms of the Acquisition are fair and reasonable from the perspective of the Company and its independent shareholders.
In its most recently published unaudited accounts, to 30 September 2022, Semnet had a turnover of US$4.22 million and reported profit before tax of approximately US$0.21 million.
Further announcements will be made as appropriate including if the Acquisition is terminated for any reason or when Completion occurs and the Consideration Shares are issued.
Tone Goh, Chairman of GST, Chairman of GSTechnologies, commented: “This strategic acquisition represents a further important step in the Company’s journey. Our commitment to innovation and excellence remains unwavering, and having inhouse cybersecurity expertise and capability is important as we continue to build a B2B Neobank providing next-generation digital money solutions. We look forward to providing updates in due course on the the progress of this acquisition and the subsequent enhancements it brings to our fintech offerings.”
