Northvolt’s $20 Billion Stockholm IPO

    Stockholm (NordSIP) – In a move that could potentially bring about one of the largest European Initial Public Offerings (IPO) in history, Swedish lithium-ion battery manufacturer Northvolt is calling for investment banks to pitch for their participation in the forthcoming deal.  It is estimated that the Stockholm listing could value the company, which was founded in 2017 by former Tesla Motors employees, at $20 billion.

    Northvolt counts Volvo, the BMW Group, Scania and Volkswagen among its strategic partners, and operates from several locations in the Nordic Region, Poland, Germany, and Portugal.  It also has a facility in the United States, and announced on 28 September that it intends to open a $5.2 billion plant in Quebec, Canada that is expected to begin operations in 2026 and offer up to 60 GWh of annual cell manufacturing capacity.  The planned IPO will support the funding of four such gigafactories as well as related recycling facilities.

    Rebalancing the global battery market

    Against a backdrop of Asian domination, European and North American governments are keen to support manufacturers like Northvolt with a view to reestablishing a certain balance in the fast-growing global Electric Vehicle (EV) and related battery markets.  The European Investment Bank (EIB) supported the establishment of Sweden’s Northvolt Ett, Europe’s first home-grown gigafactory for lithium-ion battery cells, with a $350 million loan back in 2020.  The facility’s location was chosen due to its proximity to sources of raw materials and the possibility of operating it on the local region’s renewable energy grid.

    Access to raw materials is also believed to have been a motivation behind the proposed Canadian factory.  The Canadian government is believed to have matched the potential subsidies offered by the United States government as part of its 2022 Inflation reduction Act (IRA).  Under IRA terms, EVs with at least 50% of their components made in North America benefit from tax breaks that manufacturers may pass on to consumers in the form of lower prices.

    Rothschild & Co is reportedly advising Northvolt on the initial stages of the planned IPO.  Northvolt has also raised $1.2 billion via a convertible bond issue earlier this year and is shortly expected to reveal $5 billion in new debt financing.  Forecasts from Goldman Sachs Research estimate that EVs will account for half of global car sales by 2035 and continue growing rapidly thereafter.  The EU and US governments’ support of firms like Northvolt seeks to reduce the industry’s dependence on battery supply from China.

    Image courtesy of Gerd Altmann from Pixabay
    Richard Tyszkiewicz
    Richard Tyszkiewicz
    Richard has over 30 years’ experience in the international investment industry. He has worked closely with major Nordic investors on consultancy projects, focusing on the evaluation of external asset managers. While doing so, Richard built up a strong practical understanding of the challenges faced by institutional investors seeking to integrate ESG into their portfolios. Richard has an MA degree in Management and Spanish from St Andrews University, and sustainability qualifications from Cambridge University, PRI and the CFA Institute.

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