A number of Nordic pension funds face losing capital on their investments in Swedish electric battery manufacturer Northvolt, following its Chapter 11 bankruptcy filing in the United States.

Following its foundation in 2016, the electric battery manufacturer has become popular with Nordic pension funds as they look to support the green transition through their investments. However, success has not materialised with a weakening market for electric vehicles and, in June this year, BMW cancelled a €2.15bn deal with Northvolt.

In recent months investors have been in talks with Northvolt hoping to find a solution to its financial challenges, to no avail. It announced on Thursday (21 November) that it had filed for Chapter 11 bankruptcy in the United States, allowing access to approximately USD 245m in new financing. It will continue to operate as usual during the restructuring process.

Denmark’s largest pension provider ATP has around DKK 2.3bn in Northvolt and currently owns around 5.3 per cent of the shares. It said that it maintains a dialogue with the company to “ensure the best possible protection of the invested values”.

ATP investment director, Mikkel Svenstrup, said: "We have to realise that the company's rapid expansion with associated large debts has made it very difficult to rescue the company.”

Furthermore, Sweden’s AMF, which has around SEK 2bn invested in the Swedish battery manufacturer, said that it “may take time before the situation is clarified”, and it does not “want to anticipate the process that is now taking place”. However, it added that it would look after its “savers’ interests as we move forward”.

Swedish AP funds AP1, AP2, AP3 and AP4 through their joint investment company, 4 to 1 Investments, also hold SEK 5.8 bn in shares and convertible debt in Northvolt.

In a statement, 4 to 1 Investments board chair, Jenny Askfelt Ruud, said the company’s focus is now to protect invested values and, as part of this, “take responsibility and work for the company's best interests in the long term”.

“The way forward has not yet been mapped out, but we continue to have a close dialogue with the company and are following developments closely. Prior to the investment in Northvolt, a comprehensive evaluation was done and our overall assessment is still that there is a need for a European ecosystem of companies for electrification and fossil-free transport,” she said.

Other pension funds that have invested in Northvolt include Danica Pension, which invested around DKK 800m in 2021. The Dutch pension fund ABP, has also invested €1.35bn in the company. KPA Pension, part of the Folksam Group, is also an investor.

Danica Pension CIO, Poul Kobberup, said it has been “through a lengthy process where we, as lenders, have tried to find a solution for Northvolt that best serves our customers' interests, and this has not been possible without restructuring”.

“The process ahead for Northvolt looks challenging, but we continue to do everything to defend our customers' interests. Naturally, we have continuously adjusted the value of the investment according to the current situation,” he said.

While a spokesperson for KPA Pension said it continues to "monitor the situation and have recurring conversations with representatives of Northvolt".

Commenting on the news of the bankruptcy filing, Northvolt interim chairman of the board, interim chairman of the board, Tom Johnstone, said: “Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification. We are likewise pleased by the strong support we have received from our existing lenders and our customers.”

The restructuring process is expected to be completed in the first quarter of 2025.

European Pensions has contacted ABP and PFA for comment.

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