PGP Encryption and Decryption

Hi,

We are using SAP PI 7.1 AEX single stack.

For all communication with 3rd Party, we are planning to use SFTP adapter and PGP encryption & Decryption.

How the key exchange takes place between partner and SAP PI?

Can we use any open source to generate the PGP key and store in PI server give the path of same in Sftp or file adapter?

Is there any exchange of public key required between SAP PI and 3rd party ?

How 3rd party generates PGP key for their system?

Thanks,

Vertika