H2 Green Steel secures EUR 4.2 billion in project financing and increases equity funding by EUR 300 million
H2 Green Steel has signed definitive debt financing agreements for EUR 4.2 billion in project financing and increased the previously announced equity raised by EUR 300 million to a total of EUR 2.1 billion in equity.
Together with a grant of EUR 250 million from the EU Innovation Fund, H2 Green Steel has now secured funding of close to EUR 6.5 billion for the world’s first large-scale green steel plant in Northern Sweden.
Consistent with project financings, international banks providing the senior debt will be lending in part under cover provided by Riksgälden (Swedish National Debt Office), as a green credit guarantee and Euler Hermes as an export credit cover for EUR 1.2 billion each. The guarantees cover 80% and 95% of the loan amount respectively, and are provided in accordance with market pricing. The group of over 20 lenders includes Svensk Exportkredit (SEK) and the European Investment Bank together with commercial banks, led by BNP Paribas, ING, KfW IPEX-Bank, Societe Generale and UniCredit. The junior debt consortium is led by AIP Management and comprises European and international investment banks and funds.
In relation to the equity raise of close to EUR 300 million, new shareholders include Microsoft Climate Innovation Fund, Mubea and Siemens Financial Services. Additionally, IMAS Foundation and Just Climate are some of the existing shareholders which are increasing their investments in H2 Green Steel.
The new financing marks a major milestone in H2 Green Steel’s journey to accelerate the decarbonisation of the steel industry through the world’s first large-scale green steel plant. Founded in 2020, H2 Green Steel aims to decarbonise hard-to-abate industries, starting by producing steel with up to 95% lower CO2 emissions than steel made with coke-fired blast furnaces.
“No one has scrutinised our project more thoroughly than those who back our financing. This massive commitment from our lenders, investors and the Innovation Fund is true recognition of the quality of our company. It’s also a big win for the climate as we hope the model will inspire the financing of other decarbonisation initiatives in hard-to-abate industries,” says Henrik Henriksson, CEO of H2 Green Steel.
H2 Green Steel was advised by Mannheimer Swartling in the transaction.
