Stockholm (NordSIP) – As the Northvolt collapse continues to unfold, this week the second Swedish state pension buffer fund, AP2, announced that the investment in the embattled battery company has been written down, according to its 2024 Annual Financial Report (Swedish). AP2 invested in Northvolt through “4 to 1 Investments“, a company jointly owned by AP1, AP2, AP3 and AP4. The news was first reported by Swedish public channel SVT.
“AP2 has been an indirect investor in battery manufacturer Northvolt since 2021 through 4 to1 Investments, and the investment amounted to SEK 1.5 billion at the beginning of the year, corresponding to 17 percent of the fund’s investments in sustainable infrastructure. In November, the company filed for a restructuring under American law, known as Chapter 11. As a result, the investment in Northvolt has been written down to zero SEK at the end of the year. A restructuring of the company’s capital structure is now taking place, in parallel with continued operation of the business,” AP2 states in its annual report (translated).
“4 to 1 Investments” has invested a total of SEK 5.8 billion in shares and convertible debt in Northvolt, equivalent to just under 0.3% of the four AP Funds’ total assets under management of approximately SEK 2,000 billion as of the middle of 2024. Although AP2 is the only buffer fund to have published its 2024 annual report at the time of writing, since “4 to 1 Investments” was the vehicle used to invest in the Northvolt, it stands to reason that the writing down of the investment occurred on the balance sheet of “4 to 1 Investments” and thus affects all four AP funds equally. The conclusion would be that the whole of the SEK5.8 billion investment made by the four AP funds is to be written down.
AP2 made reference to Northvolt twice again in its 2024 annual report to discuss its future engagement with Northvolt and the effect of this writing down on its returns.
Continued Engagement
AP2 explains that it will continue to engage with Northvolt through “4 to 1 Investments” and that it still believes that there is a need for a company such as this in Europe.
“4 to 1 Investments will continue to maintain a constructive dialogue with the company to protect invested values and work for the company’s best interests in the long term. Prior to the investment in Northvolt, an extensive evaluation was conducted and our overall assessment is still that there is a need for a European ecosystem of companies for electrification and fossil-free transport,” AP2 explains in its annual report (translated).
Effect on Returns
The final mention of Northvolt by AP2’s 2024 Annual Financial report was to note that the bankruptcy of the company had a negative impact on its return, especially its portfolio of sustainable infrastructure investments.
“The fund’s investments in sustainable infrastructure have generated an average return of 9 percent per year since its inception in 2020, which is considered good considering that the portfolio is still in the construction phase and the underlying investments are primarily in the project phase. The return for 2024 was -3 percent. This return has been negatively affected by the fact that the indirect investment in Northvolt, via 4 to 1 Investments, has been written down to zero kronor, as the company is under restructuring through a Chapter 11 process in the USA and it is very difficult to assess any remaining values in the current situation. The write-down has contributed negatively to the fund’s return by -0.3 percent,” AP2 concludes.
