Investors Rush to Northvolt’s Clean Batteries

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Stockholm (NordSIP) – Northvolt, a European supplier of sustainable battery cells and systems, announced the signing of a series of loan agreements worth US$1.6 billion with a consortium of commercial banks, pension funds and public financial institutions.

Northvolt was founded in 2016 as part of the EU’s transition to a decarbonised future with the support of stakeholders such as ABB, BMW AG, Scania, Stena AB, Siemens AG, Vattenfall AB, Vestas and the Volkswagen group. The company’s mission is to deliver the world’s greenest lithium-ion battery with a minimal CO2 footprint. It targets a 25% market share in Europe by 2030 and aims to secure 50% of its raw material requirements from recycled batteries.

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“The momentum for electrification is stronger than ever. Our customers need large volumes of high-quality batteries with a low CO2 footprint, and Europe must build a fully regionalised value chain to support them,” said Peter Carlsson, co-founder and CEO, Northvolt.

With this latest transaction, Northvolt has raised over US$3 billion for the development of factories and R&D investments to date. The company’s investments are focused in Sweden. The company’s Swedish facilities include Northvolt Labs, in Västerås, and Northvolt Ett in Skellefteå, which is due to come online in 2021 with a potential annual output of 40 GWh. Outside of Sweden, the company also operates Northvolt Zwei in Salzgitter, Germany, scheduled to commence operations in 2024 with a potential output of more than 20 GWh, and a battery systems factory in Gdańsk, Poland.

The debt financing package is provided by a group of commercial banks and pension funds: APG, BNP Paribas, Danske Bank, Danica Pension, IMI – Intesa Sanpaolo, ING, KfW IPEX-Bank, PFA Pension, SEB, Siemens Bank, SMBC, Société Générale, Swedbank and UniCredit, as well as the European Investment Bank (EIB), the Nordic Investment Bank (NIB) and the Export-Import Bank of Korea (KEXIM). Of the total, the EIB and the NIB’s contributions amount to US$350 billion and US$44.4 billion, respectively. The loan is structured with certain guarantees from Euler Hermes (transaction subject to final approval), Nippon Export and Investment Insurance (NEXI) and BPI France. BNP Paribas and Morgan Stanley & Co. International plc act as financial advisors to Northvolt.

“NIB’s participation in this project is relevant as electrification plays a significant role in decarbonising the transportation sector,” Henrik Normann, President & CEO of NIB commented. “The production and sourcing of state-of-the-art lithium-ion batteries is a key element in this effort. Also, establishing an industrial-scale battery industry in Sweden will have significant spill-over effects with regard to employment, research and development, suppliers and recycling.”

“Since the creation of the European Battery Alliance in 2018, the EIB has stepped up its support for the battery value chain to order to help build Europe’s strategic autonomy in a technology that is key to its competitiveness and low carbon future,” EIB Vice-President Andrew McDowell added. “I believe that EIB financing support for Northvolt has been a textbook example of how our financial and technical due diligence can help crowd in private investors to visionary projects.”

Image courtesy of Northvolt

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In the current economic environment, even the strongest companies will face challenges from the impact of the COVID-19 pandemic. Perhaps now more than ever, understanding the factors that could have a material impact on a company’s sustainability will play a role in investment decision-making.

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