Nordic Investors Rush to Northvolt’s Convertible Note

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    Stockholm (NordSIP) – Batteries are one of the main hurdles underlying the energy transition from fossil fuels to renewable energies. Given the inability to control electric output due to dependence on weather conditions and the intermittent nature of renewables, storage is a crucial factor to ensure the smoothing of energy consumption necessary for the long-term viability of the energy transition.

    Founded in Stockholm in 2017, Northvolt is one the key Nordic contributors to the efforts of developing and manufacturing the world’s greenest batteries. The company has proved popular and has attracted close to $8 billion in equity and debt financing in the last 5 years. In 2021 alone, 1,800 people have been recruited by the company, and around 150 new employees are added every month. Northvolt’s customers include Volvo Cars, Scania and Volkswagen Group.

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    Following several funding operations, Northvolt announced the signing of a US$1.1 billion convertible note this week. The proceeds from this transaction are expected to be channelled towards financing the company’s expansion of battery cell and cathode material production in Europe to support the rapidly expanding demand for batteries. Goldman Sachs Bank Europe SE, J.P. Morgan AG, and Morgan Stanley & Co. International plc act as joint placement agents to Northvolt.

    The transaction brought investments from across the region and beyond, including AP funds 1-4 (via the co-owned company 4 to 1 Investments), ATP, Ava Investors, Baillie Gifford, Compagnia di San Paolo through Fondaco Growth, Folksam Group, Goldman Sachs Asset Management, IMAS Foundation, Olympia Group, OMERS Capital Markets, PCS Holding, Swedbank Robur, TM Capital and Volkswagen Group.

    “We are proud and thankful for the support and trust from these world-class investors and partners. We will continue to work hard to deliver on the promise we have made to them to build the world’s greenest battery,” Peter Carlsson, Co-Founder and CEO of Northvolt, commented

    AMF Pension alone contributed SEK310 million to the transaction. “Northvolt is an important facilitator of the changes that society needs, and a good complement for other important change-driving companies in our portfolio, such as the wind power company SR Energy,  electricity storage company Polarium and the vehicle manufacturers Volvo Cars, AB Volvo, Polestar and CAKE. AMF also invests in the conversion of important subcontractors to the Swedish industry, such as LEAX, so that they can respond to new needs and requirements. Thanks to our strong financial position and our long-term investment horizon, we can, despite the current market situation, continue to make this type of investment that provides good returns to our customers, and at the same time contributes to a more sustainable society and a more competitive Swedish business sector,” Tomas Flodén, Head of Asset Management at AMF added.

    Northvolt produced its first battery cell at the Northvolt Ett gigafactory in Skellefteå, Sweden and made the first commercial deliveries from the factory during the spring of 2022. Other relevant Northvolt investments include the Northvolt Volvo Cars joint venture gigafactory in Gothenburg, its third gigafactory, Northvolt Drei, in Heide, Germany and a cathode factory, Northvolt Fem, being established in Borlänge, Sweden.

    At the moment, Northvolt is developing manufacturing capacity to deliver on US$55 billion in orders from key customers, including BMW, Fluence, Scania, Volvo Cars, and Volkswagen Group. A key aspect to Northvolt’s strategy involves establishing in-house competencies and a presence throughout the battery value chain, including cathode material production and recycling. Through its large-scale recycling program, Northvolt intends to enable 50% of its raw material requirements to be sourced from recycled batteries by 2030.

    “The combination of political decision making, customers committing even more firmly to the transition to electric vehicles, and a very rapid rise in consumer demand for cleaner products, has created a perfect storm for electrification,” Carlsson concludes.

    Image courtesy of Northvolt
    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.
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