H2 Green Steel raises €1.5 billion in equity to build the world's first green steel plant

8 September 2023

In one of Europe's most significant private placements this year, H2 Green Steel has successfully secured approximately €1.5 billion in equity funding from a group of investors led by Altor, GIC, Hy24, and Just Climate. This substantial investment will be directed toward the development of the world's first large-scale green steel plant and Europe's initial giga-scale electrolyzer.

Hy24, a new investor, co-leads this private placement alongside existing investors Altor, GIC, and Just Climate. Notably, the transaction also welcomes new investors Andra AP - fonden and Temasek, as well as a consortium of existing investors committed to providing additional equity funding. This group includes AMF, Cristina Stenbeck, Hitachi Energy, IMAS Foundation, Kinnevik, Schaeffler, Vargas, and Wallenberg Investments' holding company FAM.

The raised capital will be deployed for the construction and advancement of H2 Green Steel's flagship large-scale green steel plant located in Boden, Sweden. Groundwork on the Boden site has been in progress since the summer of 2022, and this funding marks a significant step towards the commencement of operations by the end of 2025.

The plant's groundbreaking approach is set to reduce CO2 emissions in steel production by up to 95 percent compared to traditional blast furnace technology. This is achieved by replacing coal in the production process with hydrogen, generated on-site using Europe's largest electrolyzer and powered by renewable energy sources. Advanced technology, digitalization, and a strong commitment to circularity and recycling will make this steel plant a pioneering endeavor.

Henrik Henriksson, CEO of H2 Green Steel, expressed his satisfaction with the caliber of investors, stating, "The caliber of investors that are backing us is impressive. Some of the most professional institutions, investors, and industrial companies globally are part of this round, and we are proud that they all share our commitment to sustainability as their true north. €1.5 billion is the largest private placement in Europe this year, and the appetite to invest in us proves both our solid business case and the market demand for green steel."

Otto Gernandt, CFO of H2 Green Steel, highlighted the importance of this financing for the decarbonization of basic materials production and its role in enabling the transformation of hard-to-abate industries, saying, "This marks the start of industrial scale decarbonization of basic materials production. The sector will require substantial investments over the coming decades to enable our customers to produce green end products and, thereby meet their climate targets."

Since its inception in 2021, H2 Green Steel has secured more than €1.8 billion in equity across three financing rounds. The company has also outlined a debt financing structure exceeding €3.5 billion in 2022. This ongoing support underscores its commitment to pioneering sustainable solutions in the steel industry.

Morgan Stanley & Co. International plc acted as the exclusive financial advisor to H2 Green Steel for this private placement.

Investor Comments:

  • Klas Johansson, Co-Managing Partner at Altor: "H2 Green Steel also fits perfectly next to Altor's increasingly broad base of investments in the green transition space. We look forward to extending the partnership with management and support on the path to launch operations at the end of 2025."

  • Choo Yong Cheen, Chief Investment Officer of Private Equity at GIC: "As a long-term investor, we are committed to providing capital to develop solutions that help decarbonize the real economy."

  • Pierre-Etienne Franc, CEO of Hy24: "This is part of Hy24's commitment to help industry get to net zero."

  • Shaun Kingsbury CBE, Chief Investment Officer of Just Climate: "Decarbonizing steel production is a critical piece of this industrial decarbonization process, and we are pleased to be part of the lead investor group that has today announced its support for the business."


Source: prnewswire.com