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Published: Mar 14, 2023
Updated: Mar 14, 2023

Nazara Technologies' Subsidiaries Hold Rs 64 Crore in Crisis-Hit Silicon Valley Bank, Shares Hit Record Low

Nazara Technologies, an Indian gaming company, saw its shares hit a record low of Rs 483.05, dropping 7% in intra-day trade on Monday amid heavy volumes. The company disclosed that its two step-down subsidiaries, Kiddopia Inc. and Mediawrkz Inc., have cash balances at the Silicon Valley Bank (SVB), which is facing a crisis. The two subsidiaries together hold $7.75 million (around Rs 64 crore) at SVB, according to Nazara.

Well Capitalized and Profitable

Kiddopia Inc., a subsidiary of Paper Boat Apps Private Limited, and Mediawrkz Inc., a subsidiary of Datawrkz Business Solutions Private Limited, remain well-capitalized and profitable, generating positive cash flows, and no impact is expected on their day-to-day operations, business performance, and growth plans. Nazara Technologies' exchange filing said the Federal Deposit Insurance Corporation (FDIC) would pay depositors an advance dividend within the next week, with future payments coming as asset sales occurred. Nazara Group maintains reserves of cash and cash equivalents in excess of Rs 600 crore, excluding the SVB impacted funds, it added.

Impact on Nazara Shares

Nazara shares fell below their previous low of Rs 484, reached on June 22, 2022, and have dropped 44% in the past year compared to a 6% rise in the Sensex. The shares had touched a 52-week high of Rs 934 on March 11, 2022, and a record high of Rs 1,677 on October 11, 2021. At 11:52 AM, the stock had erased most of its losses, trading 2% lower at Rs 507.65.

Company management assures that it's subsidiaries remain well capitalised and profitable

Nazara Technologies' subsidiaries holding funds in crisis-hit SVB raises concerns about the impact on the Indian gaming company. However, the company has assured that its subsidiaries are well-capitalized, profitable, and generating positive cash flows, and no effect is anticipated on their day-to-day operations, business performance, and growth plans. The FDIC's commitment to issuing advance dividends to depositors provides some relief, but Nazara Technologies' shares' performance will likely remain under pressure as investors remain cautious about the impact of the SVB crisis.