Telecommunications and internet conglomerate SoftBank’s Vision Fund 1 has agreed to provide $200m for one of its portfolio companies, US-based construction services provider Katerra.
The investment will give Vision Fund a majority stake in the company, with the stakes of its other shareholders “severely” diluted, people familiar with the matter told the Wall Street Journal.
Katerra offers property developers an end-to-end suite of construction services covering design, engineering and materials provision and manufacturing in addition to the construction itself. CEO Paal Kibsgaard told shareholders it needed the cash to continue as a going concern.
The company said in a statement announcing the funding that it recorded almost $2bn in revenue during 2020, adding that the cash will support the release of its first building platform: a fully-realised building model designed for repeatable manufacturing.
The deal means SoftBank has committed a total of roughly $2bn to Katerra, according to the Wall Street Journal, though that figure would include $435m in debt financing from SoftBank-backed financial services firm Greensill Capital. Greensill will cancel that debt in return for an equity stake sized at about 5%.
Katerra emerged from stealth in 2017 with $220m in funding from backers reportedly including contract manufacturer Foxconn, Greenoaks Capital, Moore Capital Management, Khosla Ventures, DFJ and Paxion, including $130m in series C financing raised at a valuation above $1bn.
The company raised another $27.8m later the same year before Vision Fund led the $865m first close of a $999m round featuring property developer Divco West, Canada Pension Plan Investment Board, Tavistock Group, Navitas Capital and a fund managed by Soros Fund Management in 2018.
Vision Fund subsequently supplied an additional $200m for the company in May 2020, but it has suffered from delays to projects caused by the coronavirus pandemic as well as delays and budget overruns for others.
Paal Kibsgaard said in the statement: “Since taking over as CEO in July 2020, my team and I have been hard at work reducing costs and refocusing on our core businesses.
“We believe that this strategic and operational realignment, supported by SoftBank, is in the best interest of all stakeholders and will provide Katerra with the financial flexibility and resources needed to invest in areas that have the most promising growth trajectory. We appreciate SoftBank’s continued support and confidence in the company and its prospects throughout this process.”
