Glenn Milnes (IkeGPS)
More than a quarter of New Zealand tech company IkeGPS' cash was held at failed Silicon Valley Bank, investors were told today.
Silicon Valley Bank (SVB) was closed on Friday, 10 March US time by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.
As of 13 March, IkeGPS had NZ$5.3 million on deposit at SVB, of which US$0.25 million was insured, the maximum allowed.
The NZX-listed company, which manufactures measurement and location devices, had total cash of approximately NZ$19.6 million. IkeGPS holds the balance of its cash, NZ$14.3 million, at other institutions.
“The situation with the receiver remains highly fluid," said IkeGPS CEO Glenn Milnes. "SVB was a bank used by nearly 50 per cent of the US technology sector, and a range of ultimate sale or asset realisation outcomes may emerge in the coming days and weeks."
Milnes said the extent to which the company would recover its cash on deposit could not be estimated at this time.
"Notwithstanding, because of the strength of our broader cash position, growth momentum, and that our US operation is delivering positive cash flow, we believe IKE remains very strongly positioned.”
According to the FDIC, all insured depositors of SVB will have full access to their insured deposits no later than US Monday morning, 13 March.
The FDIC would also pay uninsured depositors an advance dividend within the next week, with that quantum to be confirmed.
Uninsured depositors will receive a receivership certificate for their uninsured funds. As the FDIC sells the assets of SVB, future dividend payments will be made to uninsured depositors as appropriate.
(Update: US banking regulators in consultation with President Joe Biden have approved a resolution of the SVB crisis that they said would ensure all deposits would be "made whole" while not costing American taxpayers. IkeGPS now, therefore, expects no impact to its cash position.)
Over the weekend, it was reported NZ space company RocketLab had US$38 million on deposit with SVB, just under 8 per cent of its total cash.
Today, Christchurch-based and USX-listed transport technology company Connexionz reported all of its funds deposited with SVP were insured.
"We also have a US$ denominated bank account with another bank, and we will be directing customers to divert their payments there from Monday onwards," the company said.
"Though this is a dramatic event, it turns out that it will have minimal impact on us."
ASX-listed Kiwi company Xero also confirmed it had an around US$5 million exposure to the collapse, which was not considered material.
In 2014, Xero and SVB announced integration to brings Xero's financial management tools to startups and small businesses in both the US and UK.
In 2018, IkeGPS won geospatial leaders Esri as a reseller of its products before winning major US telco contracts the following year.
