(Bloomberg) -- Battery maker Northvolt AB has raised $1.2 billion from international investors as the company aims to boost production at its factory in Northern Sweden.

Northvolt extended a convertible note from last year to $3.5 billion, having secured the same amount during a financing round in August. The company’s level of fundraising in 2023 places it among the biggest in Europe’s startup industry, which is on pace for less than half the deals from 2022.

“We are going to continue to invest heavily both in our projects in Sweden and abroad,” Northvolt Chief Financial Officer Alexander Hartman said in an interview. The company has about $200 million of monthly investments in both the expansion of production and ramp-up across the group, he added

Investors in the latest round included Danica Pension, KfW, CDPQ, East Innovate and Investissement Quebec. The company, founded in 2016, has now raised more than $10 billion in equity and debt.

The convertible note has worked well for the company and its investors, Hartman said. “It minimizes discussions on valuation, has downside protection and converts into equity in the future.”

It’s a view echoed by Jacob West Buhl, Investment Director at Danica Pension, who said his firm wanted to have more of an equity exposure “having followed Northvolt closely for several years as a second-lien debt lender.” 

Rising Costs

The financing round has come amid a difficult few weeks for Europe’s largest homegrown battery maker. Northvolt said losses in the first nine months of the year jumped eight-fold to nearly 11 billion Swedish kronor ($1.1 billion) while free cash flow over the same period totaled negative 18 billion kronor.

“We have a very investment-heavy plan,” Hartman said in response to the reported losses. “To build an industry costs a lot in terms of both capex and opex, and the interim report reflects that.”

Hartman however admitted that “things have cost a bit more than we planned” and pointed to external factors such as delays and the Covid-19 pandemic.

The level of investments means the company “will continue to raise money over time,” according to Hartman. “As we enter 2024, we continue to see very high investor interest,” he said. “We are close to bringing in even more global large institutions.”

The CFO however dismissed any speculation about an imminent public listing. “There is money in the private market and we have the capacity to wait beyond 2024,” he said.

Adding to the challenges this month has been what Northvolt Chief Executive Officer Peter Carlsson described as “a dark day” for the company after two workers died at the factory in Skelleftea in separate incidents. Swedish authorities have opened an investigation into the accidents.

--With assistance from Mark Bergen.

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