Northvolt confirms $5bn debt financing round

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Northvolt cemented its position as Europe’s best-funded start-up as the Swedish battery manufacturer raised $5bn in debt financing to help it expand its first gigafactory and build a recycling facility on the same site.

It is the largest green loan raised in Europe so far, and underlines the insatiable need for capital that has forced the region’s leading battery maker to ready itself for a possible stock market listing. Executives say the Swedish industrial start-up is ready to list if market conditions improve but investors have said it will be tricky so long as the group remains heavily lossmaking.

Confirming a story from the Financial Times last March that it was looking to raise $5bn in debt, Northvolt said on Tuesday that the funding — which includes the refinancing of a $1.6bn debt package from July 2020 — was provided by 23 banks as well as the European Investment Bank and the Nordic Investment Bank.

Northvolt has now raised more than $13bn in debt and equity as it looks to build four large factories in Sweden, Germany and Canada by the end of the decade.

Peter Carlsson, Northvolt’s chief executive and co-founder, said: “This financing is a milestone for the European energy transition.” He added that it would enable the company to realise the full potential of Northvolt Ett, its first gigafactory and “demonstrates that circular, sustainable business practices are fundamental to success in today’s industry”.

Northvolt Ett, located just below the Arctic Circle in northern Sweden, first started producing batteries in late 2021 but has been hit by a series of delays and accidents, complicating production.

Customers, who have together placed $55bn of orders with Northvolt, have been left waiting for batteries from the plant, especially Swedish truckmaker Scania.

Losses at the start-up for the first three quarters of 2023 increased eight-fold from the year before to almost SKr11bn ($1.1bn). Executives have warned that the construction of future gigafactories will demand their own multibillion financing packages too.

Northvolt will also use the debt financing to fund its adjacent recycling plant, Revolt Ett, the first time a company outside Asia has placed such a facility next to battery manufacturing. Recycled battery materials have a carbon footprint that is 70 per cent lower than mined minerals, Northvolt claims.

Northvolt received the highest “dark green” rating from Cicero, a Norwegian consultancy that offers grades for the environmental quality of debt offerings.

“I’m proud to see how our ambition to mass produce the world’s greenest battery attracts top-tier financial partners, as global capital is looking to invest in electrification and climate change mitigation,” said Emma Nehrenheim, chief environmental officer.

Northvolt was advised by BNP Paribas, Allen & Overy and Mannheimer Swartling.