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Battery start-up struggles to gain backing for latest fundraising amid Europe’s slowing take-up of electric vehicles

Sweden’s government has ruled out a financial rescue of Northvolt as the country’s green battery start-up fights for survival.

Ulf Kristersson, the centre-right prime minister, said on Monday that Sweden wanted to position itself as a leading country for the green transition with new companies such as Northvolt and H2 Green Steel supplying established groups such as Volvo Cars and Atlas Copco.

But he added: “There is no question of the Swedish state going in and becoming a shareholder. Right now, the ball is in the court of Northvolt’s shareholders.”

The Swedish battery group is Europe’s great hope of fighting back against the likes of CATL and BYD of China, Panasonic of Japan, and Tesla of the US in leading the battery sector.

Despite becoming the first company in Europe to produce a cell from a homegrown gigafactory in late 2021 at its factory in Skellefteå just below the Arctic Circle, Northvolt has grappled with scaling up its production.

The lossmaking group is desperately seeking to raise fresh capital as it focuses on its first gigafactory. It will cut jobs, close down part of the Skellefteå factory and examine delays for three other planned plants in Sweden, Germany and Canada.

But after raising more than $15bn since its launch in 2017 — the most of any privately owned start-up in Europe — Northvolt is struggling to gain backing for its latest fundraising amid concerns about the outlook for electric vehicles and intensifying worries about the company’s own financial position.

Carmakers including Northvolt’s biggest shareholder Volkswagen and Volvo Cars have sounded the alarm about the slow pace of electric car sales. BMW, one of Northvolt’s earliest backers, cancelled a $2bn contract with Northvolt earlier this year in frustration at delayed deliveries.

Northvolt executives have argued that the company had enjoyed relatively little government support from Sweden, unlike the generous backing from Germany and Canada, with much of it coming in the form of loan guarantees. “It’s not like we’re dependent on a vast amount of subsidies from Sweden,” said one.

The Swedish prime minister made his comments on Monday in response to a question about whether the government would help rescue Northvolt. Kristersson said: “We don’t involve ourselves in the business plans of individual companies but we do want to be a good place for this kind of industry.”

Northern Sweden has become a hub for the green transition thanks to the abundance of renewable electricity there, largely trapped due to poor transmission links to the south of the country. But critics have questioned the risky nature of Northvolt and other ventures there, requiring huge amounts of capital while demand has been shaky.

Peter Carlsson, Northvolt’s chief executive, has in turn cast his company’s plight as central to Europe’s manufacturing future and ability to take on China and the US in the green industry. A person close to the company said: “If Europe wants to avoid becoming a museum, it needs to stand up for industries and companies like this.”

Freyr, a battery maker headquartered in neighbouring Norway, has mothballed its plant there and is instead prioritising plans in the US, where it should receive generous subsidies courtesy of President Joe Biden’s Inflation Reduction Act.

LONDON (Reuters) - Hedge fund Citadel said on Monday it has hired London-based portfolio managers for its Fixed Income and Macro business adding three new hires to start from November through next year.

The $63 billion hedge fund said it has hired Bernard Singer as a portfolio manager and Ravi Vinda, as an associate portfolio manager, both joining from hedge fund Brevan Howard. They will both start from mid-2025.

The investment manager also said in a statement it had hired Christine Boykiw as an associate portfolio manager who would take up her new role in November from UK bank, Barclays.

The hires are a part of a broader push behind the hedge fund's bond and economic trading program, said a person familiar with the matter.

Two of the hires, Vinda and Boykiw will be part of Sam Finkelstein's portfolio development programme.

Reuters reported in February that Finkelstein had been hired from Goldman Sachs Asset Management to lead a programme in its fixed income and macro business for developing portfolio managers.

Citadel, unlike some multi-strategy hedge funds, does not work in so-called "pods" which are not allowed to communicate, but rather in teams collaboratively.

"Attracting exceptional talent and investing in their professional success has been a key driver of Citadel's long-term performance and we look forward to welcoming Bernard, Ravi and Christine to our growing fixed-income and macro team," the Citadel statement said.

Multi-managers such as Citadel have continued to expand headcount this year. Over the last 12 months, these hedge funds added an estimated roughly 2,400 new hires an increase of almost 15%, a note from Goldman Sachs said earlier this month.

The new hires were not immediately available for comment when contacted by Reuters.

Taiwan regulator blocks hostile bank takeover to clear way for rival deal

Planned $17bn friendly tie-up between Shin Kong and Taishin would be country’s biggest financial sector merger

Taiwan’s financial regulator has blocked a hostile takeover of financial group Shin Kong, clearing the way for it to merge with rival Taishin Financial Holdings in a $16.6bn friendly deal.

The Financial Supervisory Commission’s move to block the hostile bid by Chinatrust, the country’s third-largest financial holding company, came after Taishin’s president warned that it could undermine the banking sector’s ability to support the globalisation of Taiwanese tech companies.

The FSC said on Monday that Chinatrust had failed to show how it would handle potential shareholder battles if its tender offer did not result in the acquisition of a controlling stake and that this raised concerns over the maintenance of order in the financial market.

The commission also said Chinatrust had not been able to demonstrate a thorough understanding of the financial situation of Shin Kong’s life insurance business.

In an earlier interview with the Financial Times, Taishin’s president Welch Lin had called on the regulator to block the Chinatrust bid, saying his group’s agreed merger with Shin Kong was the best way to enable Taiwan’s banks to help technology companies globalise.

“Our overbanking situation is terrible, terrible,” Lin said, pointing to Taiwan’s 37 banks, 21 life insurers and more than 50 securities brokerages in a market of just 23mn people.

“There are now already many Taiwanese companies like [chipmaker] TSMC who are global companies, but our financial institutions are not big enough to go global to support them,” he added.

“So the government should encourage mergers and acquisitions to create a few national champions. And if you want [that], the regulator should not encourage tender offers in replacement of friendly M&A.”

Taishin would acquire 100 per cent of Shin Kong through a share swap under a deal agreed by the two groups last month. A day after their boards approved the merger, Chinatrust offered 30 per cent more per share in a part-cash deal for between 10 and 51 per cent of Shin Kong shares.

To fend off the rival Chinatrust bid, Taishin last week raised its offer by 25 per cent. Driven by gains in Taishin shares since then, the value of the merged entity rose to NT$529.1bn ($16.6bn), Taiwan’s largest-ever financial sector M&A deal.

UBS is advising Taishin, Morgan Stanley is advising Chinatrust and Goldman Sachs is advising Shin Kong.

The battle was the first serious test of 2018 rules allowing hostile takeover bids in Taiwan’s financial sector. Under that law, the financial regulator still needs to vet such unsolicited offers. Chinatrust can only formally make its tender offer to Shin Kong shareholders after the regulator’s approval.

Lin’s comments on the Shin Kong battle highlight the challenge for Taiwan’s financial industry at a time when competition with China has prompted the US and its allies to “reshore” industry, prompting Taiwanese manufacturers to launch an unprecedented global investment and acquisition spree.

The bidding war for Shin Kong had also laid bare the fierce rivalries between the families that still dominate much of Taiwan’s corporate landscape.

Shin Kong and Taishin are controlled by different brothers from the Wu family, one of the country’s wealthiest clans. Chinatrust belongs to one branch of the Koo family, while two other Koo siblings control smaller China Development Financial Holdings and leasing company Chailease.

Taking over Shin Kong would have made Chinatrust Taiwan’s largest financial group. If Taishin’s bid is approved at extraordinary shareholders’ meetings on October 9, it will create a fourth top-tier group almost the size of Chinatrust — a result that Lin argues would be more beneficial for the industry and the corporate sector.

“We will be big enough to more aggressively go overseas,” he said.

Lin said that after a two-year integration period, a merged Taishin Shin Kong Financial Holding would look to set up banking branches in the US and western Europe, expanding beyond Asia for the first time.

The group’s view on China, on the other hand, is turning more conservative. “Taiwan’s overall exposure to China is steadily decreasing, and ours is too,” Lin said.

“China is in a situation of severe economic hardship, and will continue to struggle for at least several years,” he said. Taishin needed to consider those risks when looking at any new loan to Chinese companies, he added. “They may be OK today, but maybe they will no longer be OK three years from now.”

The case against the company is that operational problems will persist despite its insistence better days are just around the corner

A company whose credit rating falls from investment grade to junk status is known as a “fallen angel”. Boeing’s descent into the high-yield netherworld is drawing ever closer. Stalled jet deliveries along with a recent work stoppage by thousands of machinists will send cash flow even deeper into the red.

Yet, despite its parade of operational and financial troubles, Boeing still boasts a backlog of 5,400 planes worth $437bn. And that should be enough for equity investors to bite on an increasingly anticipated share offering of perhaps $10bn.

Boeing management is trying to convince Wall Street that it is merely a matter of time until its cash machine is turned on again. The company’s flagship 737 narrow body programme — paralysed by regulatory investigations over safety — was just starting to ramp up again prior to the workers’ strike. Separate production problems with the 777 and 787 have arisen. Adding to the nightmare, Boeing’s aerospace defence business is also flailing at the moment (its problems include two astronauts trapped in space).

But the planes waiting to be assembled and delivered are spoken for. The question for now is to have enough cash on hand for working capital needs, until deliveries can be made and paid for. Boeing says it likes to have around $10bn in cash on hand. As of the last quarter, after a $10bn bond issuance, cash was up to $13bn, against $58bn of total debt.

Boeing says it will defend its investment grade status — ever more imperilled after Moody’s last week put it on watch for a downgrade. Analysts at CreditSights research firm calculate incremental $400mn of interest expense from certain Boeing bonds that reset their coupon on a downgrade. In the secondary market, many mutual funds that hold high grade debt would be forced to sell Boeing securities if they no longer were appropriately rated.

The implication is that Boeing will choose to sell equity as the way to shore up liquidity to avoid credit market chaos. That choice, however, would be a painful one. Shares are 65 per cent off their 2019 peak. A $10bn offering — what Boeing’s cash burn rate and balance sheet preferences suggest would be a credible size — would imply selling a little more than a tenth of the company, an absolute and relative size not often seen in capital markets.

The case against Boeing is that its multiple operational problems will persist despite the company’s insistence that better days are just around the corner. Still, the order book is full, suggesting a staying power that should prove tempting to bet on.

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Power and battery providers offer another way to ride the AI wave

Electricity providers are ‘next derivative on AI’

As demand for artificial intelligence technologies continues to grow, a new class of companies are starting to emerge as a way to play the sector: electricity providers.

“Investors are looking for the next derivative on AI,” James West, a senior analyst at Evercore ISI on sustainable technologies energy, told me. “The technology investors that are calling us are asking about power.”

“This is the next big bull market, especially as you have some of the other AI derivatives like the chips running out of capacity,” he added. Nvidia, the stock market darling of the AI phenomenon, saw its shares sink after its latest earnings report in late August. “It is hard for Nvidia to grow earnings further because their capacity tightens,” West said.

If this shift occurs, West said the companies that are poised to do well include GE Vernova, the power and renewable energy divisions of General Electric that have been spun out into a separate company, or Fluence, a battery provider competing with Tesla.

With data centres’ energy demands accelerating, renewable energy development is happening at a rapid scale, he said. Renewable electricity generated worldwide in 2025 is expected to surpass coal power for the first time, according to the IEA.

But that might not be enough. There are two broad approaches to meeting AI’s rapidly growing power demands, experts reckon. One path is “re-carbonisation” — restarting or maintaining fossil fuel power plants. This path exposes the major risk that AI and data centres will ultimately drive up carbon emissions. Microsoft’s emissions jumped 30 per cent between 2020 and 2023, largely due to data centres for its AI development systems, the company said in its annual sustainability report this year.

AI data centres demand “99.99 per cent reliable electricity,” Thomas McAndrew, founder and chief executive of Enchanted Rock, a Texas-based microgrid provider, told me. This demand strains electricity grids further and requires increased reliance on existing coal as well as new natural gas plants, he added. The AI data centres’ demand is causing higher electricity costs for residential and higher carbon emissions, McAndrew said. “Speed to power is crucial in the AI arms race.”

An alternative to ‘re-carbonisation’

But there is a second path. If the technology companies can offset power gaps with natural gas microgrids and battery storage, then “AI data centres can ease grid pressure and provide surplus power back to the grid, supporting the expansion of wind and solar, thus reducing costs and carbon emissions,” McAndrew said.

While hardly a zero-carbon fuel, natural gas can be used more efficiently to reduce emissions and fuel data centres, KR Sridhar, founder and chief executive at Bloom Energy told me.

Bloom provides back-up energy sources for data centres, and has been one of the star portfolio companies for Kleiner Perkins, the blue-chip venture capital firm that backed tech giants such as Amazon and Google. San Jose-based Bloom can take the heat from natural gas energy and recycle that to power the cooling systems for data centres, Sridhar said.

If Nvidia and other leaders in the AI space are looking overvalued to some investors, there are other options to ride the AI wave. Electricity infrastructure companies may not be as flashy as Nvidia’s semiconductors, but they could become an AI investing theme for 2025.