Payments Group Holding Anticipates Resolution of SGT Capital Disputes by 2026 Amid Arbitration Proceedings

The Payments Group Holding (PGH) anticipates that its disputes with SGT Capital Group may be resolved in 2026, with potential implications for recovering receivables of 6.0 million EUR, including 4.0 million EUR secured by distribution claims from an investment in SGT Capital Fund II, which holds Utimaco Management Services GmbH. PGH has concluded that SGT Capital LLC fraudulently misrepresented capital commitments during cooperation initiation in 2020, potentially causing the failure of the Elatec deal in 2023 and leading to PGH's exit from private equity and separation from SGT Capital LLC as a majority shareholder, with possible tort-based damage claims in the multi-million EUR range against SGTLLC requiring further examination.

The reasons for the Elatec deal's failure are subject to a multi-day arbitration hearing in Munich between SGT Group and Summit Partners, where claims for damages in the double-digit million-EUR range may be at issue, as detailed in a petition filed by Summit Partners on 21 December 2023 with the Grand Court of Cayman. A victory for SGT Capital in this arbitration could motivate the SGT Group to settle disputes with PGH and free up financial means to address liabilities, while a defeat might bring the SGT Group into economic turmoil or liquidation, similar to a court-ordered measure over assets of predecessor fund XiO Fund I LP on 12 April 2019.

PGH is uncertain about the fate of the Utimaco holding, assigned as collateral by SGTLLC for a claim of 4.0 million EUR including interest, with the collateral amount disputed between 4.0 and 9.1 million EUR. PGH assumes that control over Utimaco, classified as relevant to national security by German and US governments, would transfer to reliable hands in such a case, with the company continuing to prosper. Recently, Utimaco divested a business unit for an alleged sale price of around 85 million EUR, improving SGT Group's creditworthiness and likely increasing the probability of an exit from the Utimaco investment in 2026, which could generate multi-million EUR inflows enabling settlement of PGH's receivables and additional 1.7 million EUR in damages claims.

A potential liquidation or receivership of SGTLLC could benefit PGH by removing obstacles to amicable solutions and dropping baseless clawback claims of 3.8 million EUR against PGH, which have made no progress in Luxembourg and would only target PGH's subsidiary TGS24 Capital Pte. Ltd., not materially affecting the PGH Group. Part of PGH's receivables, amounting to 1.1 million EUR, is directed against SGT Capital Fund II, burdened with up to 3.35 million EUR in arbitration costs, with its Luxembourg-based sub-fund vehicle renamed SGT Co-Invest SPV SCSp and in liquidation since 11 September 2025, indicating SGT Group has abandoned its ambitions for a multi-billion EUR blind pool PE fund.

PGH is in dialogue with the liquidator and fund administrator to achieve timely payment of its overdue claims, contributing to PGH's financing. PGH has no explanation for how the SGT Group funds its disputes, unsure if litigation costs allocated to SGT Capital Fund II include dispute costs relating to PGH or if law firm Willkie Farr Gallagher LLP, advising SGT Group and involved in the Elatec deal, may grant loans, with budgets likely largely exhausted. The failure of the Elatec deal in late 2023, with consequences for SGT Group, its fund investors, Summit Partners, and PGH, may not have been entirely unforeseeable ex ante, highlighting the interconnected risks in these financial disputes.