The California-based Silicon Valley Bank crisis has rocked the US and markets around the world. Here's what triggered the stock crash of the start-up focused lender even as CEO Greg Becker urged clients to "stay calm" on a conference call
SVB, which is one of the prominent lenders for tech companies, announced its public offering of a $1.75-billion share sale on Wednesday to shore up its balance sheet. It liquidated nearly all of the securities in its portfolio that were on the market
In an investor prospectus, the lender said it needed the fresh capital infusion to plug a $1.8-billion hole caused by the sale of a $21 billion loss-making bond portfolio consisting mostly of US Treasuries
SVB's portfolio was yielding an average 1.79 per cent return, far below the current 10-year Treasury yield of around 3.9 per cent
Shares of SVB were down 44% in premarket trading on Friday, after slumping about 60% in the previous session, with investors concerned about the strength of its balance sheet, their worst drop in over 35 years
The US markets got rattled post SVB stock crash and the impact is likely to trickle to Indian companies as SVB has invested in several start-ups and businesses across the country
Indian matrimonial website Shaadi.com raised an undisclosed amount of funds from SVB in 2006 along with Sequoia Capital and Westbridge Capital. This was one of SVB’s earliest bets in India
SVB has over the years come to be known as a well-known tech investor supporting early-stage start-ups. Bengaluru-based AI company Netradyne raised $65 million in a combination of senior and junior mezzanine financing from SVB in September 2022
One of the most prominent Indian start-up deals took place in October 2022 when SaaS unicorn Icertis got $150 million in funding in the form of a revolving credit facility and convertible financing from the bank
Veteran banker Uday Kotak said that an 'accident' like this was waiting to happen 'somewhere'. "When interest rates move up 500 bps from zero in a year, an accident was waiting to happen somewhere,” Kotak said in a tweet