LONDON, UK: SEED Innovations Ltd announced that the unitholders of portfolio company Fralis LLC (trading as Leap Gaming), have entered into a conditional Sale & Purchase Agreement (‘SPA’) for the sale of the remainder of Leap to existing unitholder IMG Arena US LLC based upon an enterprise value of €14 million.

IMG Arena is an existing investor in, and the second largest owner of, Leap Gaming. Following the transaction, Leap will be wholly owned by IMG.

The price will be adjusted for both working capital and repayment of debt (including the term loan of €250,000 advanced by SEED. Completion is subject to receipt by Leap of regulatory approvals required from various Gambling Commissions (including the United Kingdom and Malta). This regulatory review process will take some months and the parties are currently estimating it may be late Q1 or early Q2 2023 before the transaction can be confirmed.

SEED Innovations currently estimates that the consideration at completion will be based on an equity value for Leap of approximately €12.9 million. Of this SEED expects to receive approximately €5.6 million, payable €2.8 million upon Completion and up to €2.8 million, subject to any claims under customary warranties & indemnities, on the 12-month anniversary of Completion.

In addition, SEED will also receive repayment of its €250,000 Term Loan plus accrued interest upon Completion.

The Company intends to use the proceeds received for making further investments in accordance with its investing policy.

Ed McDermott, CEO of SEED, commented: “After several years of a strategic partnership between Leap and IMG this is the natural next step in Leap’s development. The opportunity to divest our interest in Leap, which is increasingly anomalous with the rest of our portfolio, for cash, is prudent given the continuing challenging market conditions which make a successful public market listing for Leap in the short to medium term unlikely. It is not the exit we envisaged but provides liquidity and enables SEED to continue to refocus our investment portfolio whilst at the same time setting Leap up for further success in the future.

“The divestment has come at a good time for SEED, providing it with the funds to invest in disruptive technologies, particularly in the life sciences, biotech, health and wellness industries (including medical cannabis) where most of our current investments sit and where the expertise of our board lies. We are optimistic that this investment focus has the potential to enhance long term value creation.”