Northvolt raises US$1.1bn in ‘cautious capital market’ as IPO looms

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Northvolt has raised US$1.1 billion in new capital ahead of a potential IPO in the next two years, amidst what a company spokesperson described as a “cautious capital market”.

The Sweden-based lithium-ion battery gigafactory company has signed a US$1.1 billion convertible note to finance its expansion. It brings its total raised since inception to US$8 billion, though the company has not publicly provided an update to its valuation, which was touted to be US$12 billion prior to this capital raise.

A convertible note is a debt instrument that converts to equity at a later date instead of paying principal or interest. Participating investors were AMF, 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.

When asked if macro-economic factors like the high inflation and supply chain constraints had driven this capital raise or affected the company’s project timelines, Northvolt’s VP communications & public affairs Jesper Wigardt told Energy-Storage.news:

“The battery industry is very capital intensive, so this is a natural step to continue our expansion in Europe. We have definitely seen the macro-economic trends that has created a more cautious capital market – but that’s also why we see this as a show of strength for our company and a wide-spread understanding of the need for a continuous rapid expansion of battery production.”

“The Covid pandemic and the following disruption in global supply chains definitely posed a challenge for us, but we’ve been working hard with our suppliers to find new solutions and lose as little time as possible, and keep to our timelines. The first cell out of Northvolt Ett before the end of 2021 was one of those major milestones that we were very pleased to reach, and we will continue to fight every day to ramp up production and deliver to our customers.”

Recent activity by Northvolt and its energy storage strategy

Northvolt is launching multiple facilities in Europe covering the battery supply chain, including cathode material production, battery recycling and lithium-ion cell production, and had a busy first half of the year.

Its recycling plant in Norway, launched through a joint venture, started operations in May as reported by Energy-Storage.news and Northvolt made its first commercial deliveries to customers from its Northvolt Ett gigafactory in Sweden during spring 2022. In March, it announced it would build a battery cell gigafactory in north Germany, its third, and the month prior acquired a site in Sweden for a 100GWh cathode material gigafactory.

Northvolt has a total of US$55 billion in orders from companies primarily in the EV sector but has also struck deals with stationary energy storage companies like Fluence, the largest battery energy storage system integrator in the world. The two will cooperate to deliver battery technology for grid-scale storage applications, while Northvolt is also building a factory in Poland for assembling energy storage systems (ESS) in Poland with an initial output of 5GWh per year.

“The majority of our supply agreements are with automotive customers, however a significant volume of Northvolt Ett’s capacity is committed to energy storage customers. We’re not set on an exact share of production, but there is tremendous momentum for ESS (energy storage systems) in Europe and we look forward to delivering products which will play a fundamental role in the energy transition,” Wigardt said.

IPO on the cards

The company is also mulling an IPO within the next two years, according to a widely-cited interview with chairman Carl-Erik Lagercrantz who said going public in that time frame would be a “reasonable” expectation.

When asked to comment, Wigardt said: “Yes, due to the capital intensive nature of the battery industry, we will most probably see a need to access public markets in the future. However, we’re not in a hurry and are currently keeping all options open.”

Fellow Nordic-based gigafactory group, Norwegian startup FREYR, went public through a SPAC merger in July last year. In a recent update on its first gigafactory, FREYR said that factors including supply chain constraints and inflation have driven an uplift in the expected cost since plans were first announced.

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