Canada’s Investment Management Corporation of Ontario (IMCO) has made a significant investment of $400 million in Northvolt, a leading battery producer based in Sweden. This investment will support Northvolt in expanding its production of lithium-ion batteries as the company prepares for a potential initial public offering (IPO). Rossitsa Stoyanova, IMCO’s Chief Investment Officer, expressed the organization’s confidence in the investment, stating, “Northvolt really fits with a lot of the trends we are trying to invest in,” in an interview with Reuters. She referred to themes including the transition to a lower-carbon economy and the restructuring of global supply chains.
IMCO’s investment comes in the form of convertible notes, a type of debt that can convert to equity on pre-agreed terms. Stoyanova further explained, “Whether it (Northvolt) goes public or stays private, we’ve done our homework and we are happy with the investment.”
A spokesperson from Northvolt shared the company’s optimism about future financing plans, stating, “We hope to reveal the next steps in our financing plan in the near future.”
The investment from IMCO represents the largest deal in Europe for Northvolt. Matthew Mendes, IMCO’s head of infrastructure, highlighted the company’s competitive advantages, long-term contracts, and lower-carbon supply chain, stating, “We think there is a really strong story that will resonate with public investors (if Northvolt lists).” He further added, “We have examined the investment jointly by our team and IMCO’s public equities managers.”
Northvolt, backed by notable investors including BMW and Volkswagen, has successfully delivered its first battery cells from its gigafactory in Skelleftea, Sweden. The company has raised over $8 billion in debt and equity since 2017, with $1.1 billion raised through convertible notes from multiple investors last year.
The convertible notes offer IMCO regular interest payments and provide downside protection in case Northvolt faces growth challenges. IMCO’s investment diversification strategy aims to allocate more funds to continental Europe and Britain. Stoyanova stated, “Strong policy support in Europe for the shift to electric vehicles and the onshoring of manufacturing make Northvolt particularly attractive.”
Northvolt, valued at $12 billion in 2021, has been in discussions with banks about a potential IPO that could value the company at over $20 billion. The company recently announced plans to invest billions of euros in constructing an electric vehicle battery plant in Germany, while also seeking debt funding to expand its factories.
IMCO manages over $73 billion in assets across various classes including stocks, bonds, real estate, infrastructure, and private equity. The organization was established seven years ago when Ontario decided to consolidate its public sector pension schemes, allowing IMCO to leverage its substantial assets for direct purchases and collaborations with key investment partners.
