One of Canada’s largest pension groups has invested $400mn into Northvolt, as the Swedish battery start-up pushes ahead with plans to build an additional factory in Germany.
The Investment Management Corporation of Ontario — which has about $73bn invested and pools pensions from the region’s public sector — has bought convertible loan notes in the battery group, it said on Tuesday.
Northvolt, founded in 2017, is Europe’s largest homegrown battery maker, and its expansion is core to the region’s aim to avoid ceding battery leadership to Asian rivals, particularly China.
The group has been constantly seeking funding as it expands from its current site near the Arctic Circle and is considering a stock market listing next year.
“We’re excited to partner with IMCO’s fundamental equities and global infrastructure teams to build the future of clean energy together,” said Alexander Hartman, chief financial officer of Northvolt. “This investment fuels our expansion efforts, allowing us to further extend our global footprint and drive sustainable progress in our mission to deliver the world’s greenest battery.”
Convertible notes are debt that can convert to equity if certain conditions are met, and are an increasingly popular route for private groups to make large investments. The deal is IMCO’s largest in Europe to date.
For Northvolt, the latest funding round is one of several it expects to make as it targets global expansion. It is in talks to raise about $5bn in equity financing, the FT reported in March, with a deal anticipated later this year.
This comes on top of the $1.1bn it raised through convertible notes last July, taking the total amount of debt and equity financing it has raised since its founding to $8bn.
But the business is also examining a larger stock market listing, one that could give it a valuation of $20bn. The company is in talks with several banks about the move, with any float unlikely to happen until at least next year.
The company is already Europe’s largest homegrown battery manufacturer, with aims to build a second facility in Sweden’s Gothenburg alongside Volvo.
Last month, the group picked Germany over the US for its third plant, after Berlin agreed to significant subsidies to counter the Inflation Reduction Act from the US.
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