Softbank bails out Katerra and takes majority stake

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Modular prefabrication the society and wood innovators Katera reportedly saved from bankruptcy with a $200 million cash injection from Japanese investment giant Softbank, according to the the wall street journal.

Additionally, Softbank takes another 5% stake in the company, making it Katerra’s majority shareholder.

Although Katerra promised to bring “the Silicon Valley approach to building” (as heard in our 2018 profile of the then fledgling company), he seems to have done so ironically. Buoyed by massive hype and investments from venture capital backers, including Softbank’s Vision Fund, the company embarked on an expansion spree, grabbing Michel Green Architecture and Lord Aeck Sargent in 2018. That same year Katerra merged with Indian technology company KEF Infra to expand its international reach, and in 2019 they opened a cross-laminated timber (CLT) plant in Spokane Valley, Washington.

However, things weren’t all rosy. This year, affected by the coronavirus pandemic, Katerra first reduced its global staff by 3% in April and cut higher salaries, then laid off an additional 7% of its workforce in July, citing profitability. Apart sell unfinished projectsthe design-build the startup saw its revenue peak when CEO and co-founder Michael Marks left and was replaced by Paal Kibsgaard in May.

On Wednesday, December 30, 2020, Katerra shareholders approved the investment of Softbank’s Vision Fund 1; an investment of $200 million following other Softbank, worth $200 million, moved into Katerra in May after Kibsgaard took over with a promise to turn things around. Prior to the latest round of investment, the Japanese conglomerate had already poured $2 billion into Katerra, but this time the circumstances seem more dire.

According to WSJ, Kibsgaard told investors that the latest injection was necessary to avoid filing for bankruptcy and would ensure the business continued. In return for another 5% stake, Softbank convinced Greensill Capital, a capital finance firm it also backed, to forfeit Katerra’s $435 million in debt.

“The decision to recapitalize follows a thorough review of the options available to us to strengthen our financial strength and ensure Katerra’s ability to pursue our goal of transforming the construction industry,” Kibsgaard said in a statement. A press release. However, Softbank’s continued involvement could not help draw comparisons with their unfortunate involvement in WeWork from cheekier outlets.

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