SoftBank throws $200m lifeline to prefab construction disruptor Katerra

Japanese investment firm SoftBank is to follow its $2bn investment in the new prefabricated construction firm Katerra with another $200m, preventing it from having to seek protection from its creditors, according to a report in The Wall Street Journal.

Paal Kibsgaard, Katerra’s chief executive, told shareholders last week that the company needed the additional help from SoftBank "to continue as a going concern".

The company commented in a press statement that the recapitalisation had been approved by its shareholders and would allow it to focus on "enhanced operational capabilities", and would position it "to accelerate its path to profitability and continue its pursuit to transform the construction industry through innovation of process and technology".

Under the terms of the deal, SoftBank will become the Californian company’s majority stakeholder, and Greensill Capital, a financial services company partly owned by SoftBank, will take a 5% stake in exchange for forgiving $435m in debt.

In January last year, SoftBank pumped $700m into the company, and in January 2019 it invested $865m (see further reading).

Katerra was founded in 2015 by a group of real estate and electronics executives with the aim of  "disrupting" the construction industry by integrating design, component manufacturing and site assembly under a digital platform.

However, the company has struggled with delays, cost overruns and layoffs. Its co-founder, Michael Marks, stepped down as chief executive in May 2020, a month before 400 staff were laid off, about 7% of its total payroll.  

Kibsgaard stepped up from chief operating officer to get the company back on track. He told the Journal: "I greatly respect the backing that we got from SoftBank and wish them the absolute best and hope that I can be helpful."

SoftBank said in a statement Wednesday that Kibsgaard "addressed several operational inefficiencies and improved the financial trajectory of Katerra", and said it was committed to the company’s long-term vision of digitised construction.

Image: Robots make wall panels at a Katerra factory (Katerra)

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