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24 Oct - Commercial Awareness - Energy

Topic: EU’s homegrown battery manufacturer plans to go IPO

https://www.ft.com/content/ca7a87b7-8f37-411e-851e-cb83750dba0f

https://www.ft.com/content/47381ec0-00ba-459b-a68e-07591c9c3e5b

Today is another article deep-diving into batteries. I find it helpful to learn about a sector in-depth from the POV of different countries. Previously, I’ve explored China’s battery sector, so this article will be about the EU’s homegrown battery maker – Northvolt – and its growth.

History

Northvolt was founded in 2017 by two Tesla executives. It only use renewable energies in its battery factories – derived mostly from the country’s hydropower resources – and it is aiming to manufacture half of its battery from recycled cells material before 2030.

China

• Putailai, a Shanghai-listed battery supplier is investing $1.3bn in Northvolt – signifying Western’s reliance on Chinese energy sector.
• Putailai is among the four biggest Chinese groups in the sector that account for about 50% of the global market. It is the top synthetic anode producer in China.
• Putailai is building a factory to manufacture anodes, the (-) sign on batteries. The factor will be based in Sundsvall, central Sweden. Northvolt is the factory’s first major customer as the anodes supply from Putailai will help to cut its carbon footprint by more than 90% compared to importing from China.
• Sweden also attracts a series of Asian suppliers including: South Korea’s Dongjin, China’s Kedali

BlackRock

Northvolt raised €1.2bn in convertible bonds from BlackRock. It has more than $55bn in orders from car and truckmakers. Its latest fundraising is backed by three Canadian pension funds: IMCO, CPP, and Omers. Alongside BlackRock, they issued €1.1bn in convertible bonds.

The IPO

• This week, FT reported that Northvolt is looking to list on the NASDAQ Stockholm. It has been talking to investment banks to value their company at roughly $20bn and Rothschild is providing advice on the IPO.
• With the IPO, they could become EU’s largest battery maker. They’re backed by Goldman Sachs Asset Management, Volkswagen, BMW, Siemens and Blackstone. They plan to raise $5bn in debt financing, which will cement its status as the EU start-up that raised the largest capital.
• They will start to construct a factory outside Montreal, Canada to rival Asian players.
• The first gigafactory began its construction in Sweden at 2021. It’s planning to open three more, with the help from the generous green subsidies under the IRA.