Amid the shock collapse of US-based Silicon Valley Bank (SVB), the largest vendor in the startup ecosystem, digital gaming and sports platform Nazara Technologies on March 12 said that two of its step-down subsidiaries -- Kiddopia Inc and Mediawrkz Inc -- hold cash balances there. The balances held at SVB by the subsidiaries cumulatively account for $7.75 million (approximately Rs 64 crore).
Kiddopia Inc is a subsidiary of Paper Boat Apps Private Limited (owned 51.5 percent by Nazara), while Mediawrkz Inc is a subsidiary of Datawrkz Business Solutions Private Limited (owned 33 percent by Nazara).
"FDIC has stated that it would issue an advance dividend to depositors within the next week with future payments coming as asset sales occurred. Regardless of the ultimate outcome and its timing, both subsidiaries continue to be well capitalised and are generating positive cash flows along with profitability. Therefore, we expect no impact on their day-to-day operations, business performance and growth plans due to the SVB event," Nazara said in the filing.
Further, the Nazara Group continues to maintain healthy reserves of cash and cash equivalents in excess of Rs 600 crore excluding the SVB impacted funds, the company added.
Currently, SVB is under the receivership of the Federal Deposit Insurance Corporation (FDIC). The FDIC, in a statement, said as of December 31, 2022, the Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The number of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.
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FDIC seized the assets of the collapsed lender on March 10, marking the largest bank failure since Washington Mutual during the height of the 2008 financial crisis.
The bank failed after depositors — mostly technology workers and venture capital-backed companies — began withdrawing their money creating a run on the lender. SVB was heavily exposed to tech industry and there is little chance of contagion in the banking sector as there was in the months leading up to the Global Financial Crisis more than a decade ago.
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Notably, the FDIC did not announce a buyer of Silicon Valley's assets, which is typically when there's an orderly wind down of a bank. The FDIC also seized the bank's assets in the middle of the business day, a sign of how dire the situation had become. The financial health of Silicon Valley Bank was increasingly in question this week after the bank announced plans to raise up to $1.75 billion in order to strengthen its capital position amid concerns about higher interest rates and the economy.
(With agency inputs)
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