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Northvolt has raised €1.2bn in convertible bonds from investors including the world’s largest money manager BlackRock, as Europe’s biggest homegrown battery maker plans to boost production to meet electric vehicle demand.
The debt issuance on Tuesday comes as the Swedish start-up prepares to raise more than $5bn in equity financing in the next few weeks ahead of a planned stock market listing likely to be next year, according to people familiar with its plans.
The green battery group, whose shareholders include Volkswagen, Goldman Sachs and BMW, needs billions of euros in capital to fulfil its plans to build or expand at least four gigafactories, including one due to be announced in the US or Canada in coming weeks.
Dozens of other European start-ups are also racing to meet battery demand as more vehicles are powered by electricity instead of oil. Northvolt, which has more than $55bn in orders from car- and truckmakers, is the furthest advanced.
Northvolt’s latest fundraising — backed by three Canadian pension funds, IMCO, CPP, and Omers, alongside BlackRock — follows a similar €1.1bn convertible bond the company issued in July 2022.
It takes Northvolt’s total amount of debt and equity fundraising to more than $9bn, meaning it has raised more financing than any start-up in Europe.
Northvolt started production at its first gigafactory just south of the Arctic Circle in Sweden at the end of 2021.
It is planning to open three more — one in co-operation with carmaker Volvo in Sweden, a second in northern Germany, and a third in North America, thanks to generous green subsidies from the Joe Biden administration.
The Swedish group is in talks with bankers about a stock market listing, and was considering whether to list in Stockholm, the US or both, said people familiar with the discussions.
One person said it was unlikely the listing would take place this year but that the company was ready for an IPO should the conditions be right. People familiar with the listing plans have mooted a valuation of about $20bn.
Peter Carlsson, chief executive and co-founder of Northvolt, on Tuesday said he was “proud to see our continued effort being recognised by investors”.
“We are receiving significant interest from capital markets to support our mission,” he added. “These milestones reinforces our position to meet the massive demand for sustainable battery solutions.”
David Giordano, global head of climate infrastructure at BlackRock said the battery manufacturing sector had attractive growth potential driven by the accelerating adoption of battery storage and electric vehicles. “As a leading investor in the energy transition, we look forward to supporting [Northvolt’s] continued growth,” he added.
Northvolt is using only renewable energy in its battery factories — in Sweden derived mostly from the country’s hydropower resources — and is aiming to have half of its battery material come from recycled cells by the end of the decade.
The latest fundraising coincides with the Swedish company assembling its first industrial energy storage products, in Gdańsk in Poland. Deliveries are expected to start later this year.
Northvolt’s battery recycling plant, the first such large-scale facility in Europe, is also due to start operating in the coming weeks.
Goldman Sachs, JPMorgan, and Morgan Stanley acted as joint placement agents for Northvolt for the convertible bond.