One of Canada’s largest pension groups has invested $400 million in Northvolt as the Swedish battery startup moves forward with plans to add a factory in Germany.
Ontario Investment Management, which has invested about $73 billion and pools public-sector pension funds in the region, has purchased the battery group’s convertible loan notes, the company said Tuesday.
Founded in 2017, Northvolt is Europe’s largest home-grown battery maker, and its expansion is central to the region’s aim to avoid ceding battery leadership to Asian rivals, particularly China.
The group has been on a constant quest for funding as it expands from its current location close to the Arctic Circle and is considering a stock market listing next year.
“We are excited to partner with IMCO’s fundamental equity and global infrastructure teams to build a clean energy future,” said Northvolt Chief Financial Officer Alexander Hartmann. “This investment advances our expansion efforts, allowing us to further expand our global footprint and drive sustainable progress towards our mission of delivering the world’s greenest batteries.”
Convertible notes are debt that can be converted into equity if certain conditions are met, and are an increasingly popular route for private groups to make large investments. The transaction is IMCO’s largest in Europe to date.
For Northvolt, the latest funding round is one of several expected as it targets global expansion. The company is in talks to raise about $5 billion in equity financing, with a deal expected later this year, the Financial Times reported in March.
This builds on the $1.1 billion raised in convertible notes last July, bringing the total debt and equity financing it has raised since inception to $8 billion.
But the company is also studying a larger stock market listing, which could value it at $20 billion. The company is in talks with several banks about the move, which will not float until at least next year.
Already Europe’s largest home-grown battery maker, the company aims to build a second factory in Gothenburg, Sweden, alongside Volvo.
Last month, the group chose Germany over the United States for its third factory after Berlin agreed to provide heavy subsidies to counter the U.S. Lower Inflation Act.