ING has added to its fast-growing portfolio of sustainable loans, becoming a lead lender in a $1.6 billion debt financing package for Sweden’s Northvolt. The debt raise will enable the creation of Europe’s first home-grown gigafactory for lithium-ion batteries.
The package – provided by a consortium of leading commercial banks, pension funds and public financial institutions –- increases the total amount Northvolt has raised to date to more than $3 billion.
A key player in the energy transition, Northvolt is a battery developer and manufacturer specialising in lithium-ion technology for electric vehicles. Northvolt sets itself apart from other battery manufacturers by manufacturing batteries in the most sustainable way possible, using renewable energy and the ambition to maximise the use of raw materials secured from recycled batteries.
The consortium includes 12 other commercial banks, as well as the European Investment Bank, the Export-Import Bank of Korea, and export credit agencies Euler Hermes, BPI France, and NEXI.
A green energy future
The financing will support the development of the gigafactory Northvolt Ett in Skellefteå, Sweden. Northvolt is also making significant investments in battery cell technology, process development and recycling at the recently established industrialisation factory, Northvolt Labs, in Västerås, Sweden.
“We congratulate Northvolt on reaching this important milestone and eagerly anticipate the future this step will help usher in,” says Diederik van den Berg, Global Lead Renewables & Power, Energy at ING. “As a leading bank in financing the energy transition, ING is excited to be part of this first chapter of the Northvolt story; we look forward to supporting the company in its ambition to transform the battery production industry.”
The fact that world-class financial institutions are supporting a new industry in Europe is a clear sign of where the markets are headed and the opportunity that brings for sustainable investments, says Peter Carlsson, CEO and co-founder of Northvolt. “Europe needs to build a fully regionalised value chain for batteries, which has to be supported by further significant investments from both the public and private sectors over the coming years.”
ING helped make the transaction possible with its unique expertise in the energy sector at large, and its leading track record in limited recourse financing in particular.
“ING’s sector expertise across the battery production value chain (ranging from metals & mining to automotive, and from energy to export finance) helped us shape a uniquely innovative financing structure befitting Northvolt’s ambitions,” says Tim van Pelt, Director, Renewables & Power, Energy at ING.
We are proud to have played a pivotal role in this transaction which is important for the energy transition, he says, providing senior debt financing to Northvolt Ett as Mandated Lead Arranger and Senior Lender, as well as providing second lien financing through ING’s Sustainable Investment Fund.
As documentation and insurance bank, ING was central to all negotiations between the company and the debt providers over the course of more than a year. ING will remain involved in the transaction after signing, by acting as Intercreditor Agent to the transaction as a whole and as Facility Agent for two facilities. ING will also act as Joint FX Hedge Coordinator and IR Hedge Bank to help Northvolt mitigate its financial risks. ING Fund Finance in New York will provide a letter of credit to two of the funds that invest in Northvolt AB, the owner of Northvolt Ett.
Shift to sustainable
On the importance of this transaction for the energy transition, Van den Berg says: “Northvolt Ett is the first major step in realising the company’s ambitions to become a leading European supplier of sustainably produced batteries that will drive the electrification of transportation.”
“With the strong backing of the EU, European OEMs, and solid financial investors, the future of Northvolt looks bright indeed.”