Denmark’s PFA finances construction of one of Europe’s largest factories

Danish pension company, PFA, has entered into an undisclosed triple-digit million loan agreement to finance the construction of what will be one of Europe’s largest factory facilities for the production of sustainable lithium-ion battery cells for primarily electric vehicles.

The loan agreement is with Swedish company, Northvolt, and will finance the factory known as Northvolt One. PFA's loan forms part of a larger loan package of USD 1.6bn, corresponding to DKK 10.2bn, for the construction of the factory.

Commenting, PFA head of alternative investments, Peter Tind Larsen, said: “As a responsible investor, we at PFA want to make a positive contribution to the green transition, and we believe that electric vehicles will play a significant role for many years to come when it comes to reducing CO2 emissions from transport.

“Northvolt's goal that 50 per cent of the raw materials will eventually come from recycled batteries, and that they use exclusively local wind and hydropower in the energy-intensive production of battery cells, makes the sustainable agenda even clearer. Therefore, we consider this a really strong investment, which we expect will benefit our customers with a solid risk-adjusted return.”

PFA has recently launched the climate-strong pension product PFA Klima Plus, which gives PFA's pension customers the opportunity to invest all or part of their pension savings in a portfolio of selected climate-friendly investments - a portfolio which is now being expanded with the investment in Northvolt One.

The owners behind Northvolt include German car manufacturers Volkswagen and BMW as well as the American investment bank Goldman Sachs. Northvolt develops the battery cells together with Volkswagen, BMW and others, and the battery cells in Northvolt Labs - the company's factory - are already being tested on a smaller scale.

Although Northvolt One is not yet complete, several customers have committed to a large share of the factory's future capacity.

“Large-scale European battery cell production is considered essential from a strategic perspective for European industry - including in particular the automotive industry. In addition, Northvolt has an experienced management and a strong and strategically robust group of owners behind it, who have already invested significant amounts in the company," Tind Larsen added.

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