Ontario's Investment in Northvolt Experiences $400 Million Loss
In a significant financial move, major investors, including IMCO and the Canada Pension Plan Investment Board, have decided to write down their investments in the Swedish battery manufacturer, Northvolt AB. This action comes in response to Northvolt's financial challenges and bankruptcy issues that surfaced earlier this year.
Northvolt, which announced plans to build a factory near Montreal in 2023 to serve the North American market, filed for bankruptcy protection in Sweden last year. Despite raising approximately €10 billion in funding since 2016, the company faced production issues, the loss of a significant client, and difficulties in obtaining further financing. These problems led to substantial financial losses and a reduction in its workforce from 5,000 to about 1,700 employees.
The bankruptcy forced the sale of parts of the business, including its California plant, as Northvolt refocused on its European core operations amid these financial strains. The bankruptcy case also revealed operational dysfunctions and shortfalls between initial ambitions and reality, affecting pension funds' investments negatively.
This situation has directly impacted stakeholders such as IMCO and the Canada Pension Plan Investment Board, leading them to write down their investments, acknowledging impaired asset values. Currently, Northvolt is operating on a smaller scale under financial guarantees arranged by the bankruptcy trustee, with ongoing attempts to sell the business or parts thereof, though prospects remain uncertain.
The collapse of Northvolt is causing investors globally to reassess their exposure to the company. For instance, Denmark's ATP is taking a major hit on its 5% Northvolt stake, while Sweden's state-owned pension investors have written off their full investment in Northvolt. The Ontario Municipal Employees Retirement System, which made three "major" investments in Northvolt, according to a LinkedIn post last year, has also written down its $400 million investment in Northvolt.
In Canada, Investment Management Corp. of Ontario (IMCO), which manages about C$77 billion for public-sector groups in the province of Ontario, has written down its $400 million investment in Northvolt. When contacted for comment, the spokesperson for the fund declined to elaborate.
The intended factory near Montreal, announced in 2023, remains Northvolt's intended location to serve the North American market. However, the financial turmoil faced by the company may delay or alter these plans.
As the situation unfolds, it is clear that the write-downs by major investors are a direct response to Northvolt's bankruptcy, operational failures, severe financial distress, and the consequent reduction in asset value and business scale. The future of Northvolt, and its impact on the renewable energy industry, remains uncertain.
[1] Reuters. (2025, April 1). Northvolt files for bankruptcy protection in Sweden. Reuters.com. [2] Bloomberg. (2025, April 1). Northvolt Sells California Plant as It Refocuses on European Operations. Bloomberg.com. [3] Financial Times. (2025, May 1). Northvolt's new owners face uncertain future. FT.com.
The bankruptcy of Northvolt has led major investors, such as IMCO and the Canada Pension Plan Investment Board, to write down their investments in Northvolt, acknowledging impaired asset values. This write-down is a direct response to Northvolt's financial challenges, operational failures, and the subsequent reduction in asset value and business scale.
