Mergers and Acquisitions

Charging Europe’s battery market with private placements

Private placements are set to play a key role in financing Europe’s multi-trillion-dollar transition to a battery-powered society.

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By Paul Betts
Published May 25, 2022 | 2 min watch
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Key Points

  • A multi-trillion-dollar investment will be needed between now and 2050 to scale up Europe’s evolving battery ecosystem and meet net zero targets.
  • Many energy transition companies are in their infancy, unable to tap public equity markets, so the capital they need to expand has to be privately raised.
  • Private placements can play a key role in financing Europe’s most promising new zero-carbon technologies and battery-powered infrastructure.
  • Energy innovation needs financial innovation and RBC are uniquely placed to mobilize capital across the entire battery value chain.

Europe’s ambition to create a strong battery market ecosystem and reach net zero carbon emissions by 2050 comes at a cost. A tremendous amount of capital will be required to build EV charging networks, battery recycling facilities, and to fund new mining facilities across Europe. To scale up the most promising new zero-carbon technologies and infrastructure, trillions will need to be invested in emerging energy transition companies.

Most of these companies are still in their infancy, with technologies that still need to be proven or de-risked. Almost all of them are private and unable to tap public equity markets, so the vast majority of capital will need to be privately raised. Which is why private placements can play a key role in building the battery powered ecosystem of tomorrow.

“Many energy transition companies are in their infancy. Almost all are unable to tap public equity markets, so the capital they need has to be privately raised.”

Paul Betts, MD, M&A, Europe

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A combination of innovative technology, scale-up capabilities, and private capital is needed to power change. Northvolt, a Swedish battery developer and manufacturer, is a prime example. They raised US$2.75bn during 2021 to expand battery cell capacity to 60 GWh from a number of Swedish pension funds, OMERS (one of Canada’s largest defined pension plans), GS Asset Management and Volkswagen, with an implied valuation of close to US$12bn. In addition to the private placement, Northvolt secured more than US$6.5bn in equity and debt to enable an expansion plan leading up to and beyond 150 GWh by 2030.

The priority is to unlock large scale investment across the battery value chain as quickly and efficiently as possible to power similar success stories. For private placements, investors require a lot of education on this new emerging sector. These are not straight forward book build and syndication deals. The process is actually much more like a typical M&A transaction.

For this reason, RBC’s M&A team is now running several private placement processes in a similar way to a traditional two-stage M&A process with the aim to attract strategic investors. It’s a distinctive model, but energy innovation needs financial innovation to ensure sustainable success, and RBC Capital Markets are uniquely placed to mobilize capital across the entire battery value chain.

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