OMERS Invests Alongside Porsche to Finance Group14 Technologies
Group14 Technologies, a developer of materials that enhance the output of lithium-silicon batteries, has raised $400 million from a group led by Porsche AG, OMERS Capital Markets, Decarbonization Partners and other investors.
The money will enable Group14 to begin constructing its second plant in the U.S.
Materials supplied by the Woodinville, Washington-based company help boost lithium-silicon batteries by 50% from traditional lithium-ion batteries, which result in greater range between recharging of vehicles that use them.
More automakers are turning to lithium-silicon because it is compatible with existing manufacturing processes.
Porsche has been delivering unique and sustainable sports cars for more than 70 years.
In March, the German company, which is owned by Volkswagen AG, said it expects electric vehicles to account for 80% of its global sales by 2030. Porsche also plans to build its own charging network.
Porsche currently has only one EV in its lineup, the Taycan.
“Our investment in Group14 is an important step for Porsche,” said Lutz Meschke, deputy chairman of Porsche AG and member of the executive board. In a statement. “We have been actively investing in ambitious companies since 2016 and through our venture capital unit.”
Over the last year, Group14 has launched a battery active materials factory in Woodinville, Wash., about 20 miles northeast of Seattle. It also broke ground SK Group on a joint venture factory in South Korea.
“Group14 is well-positioned to elevate all batteries by enabling the transformational performance of silicon in today’s lithium-ion and tomorrow’s solid-state applications,” said Rick Luebbe, Group14 co-founder and CEO.
One of its customers is Cellforce Group, a Porsche subsidiary, that plans to produce lithium-silicon battery cells in Germany beginning in 2024 to help power Porsche’s planned electric vehicles.
In November 2021, Group14 announced a partnership with StoreDot, a provider of extreme fast charging battery technology for electric cars.
Porsche’s partnership with Group14 comes days after the Biden administration announced it will allocate more than $3 billion to assist electric vehicle battery manufacturing in the U.S. The funding will come from the Department of Energy and is part of the $1 trillion infrastructure bill President Biden signed in 2021.
Among the goals is to increase processing of minerals used in EV batteries and to make it easier to recycle those batteries. Biden wants half of all new vehicles sold in the U.S. to be battery-powered by 2030.
Group14 Technologies put out a press release on this deal:
Group14 Technologies, a global manufacturer and supplier of advanced silicon-carbon technology for lithium-silicon batteries, today announced it has raised $400 million in Series C funding led by Porsche AG with participation from OMERS Capital Markets, Decarbonization Partners, Riverstone Holdings LLC, Vsquared Ventures, Moore Strategic Ventures, and other large institutional investors. To deliver to customers including Porsche subsidiary Cellforce Group, Group14 plans to break ground on its second commercial-scale BAM factory in the U.S. to stay ahead of demand from markets reliant on high-performing batteries.
To meet fast-approaching targets worldwide for vehicle electrification and EV adoption, Group14’s next-generation materials help lithium-silicon batteries deliver 50% higher performance than traditional lithium-ion batteries, eliminating range and charge anxiety. As automakers pledge to electrify fleets, OEMs are turning to lithium-silicon technologies, which are fully compatible with existing manufacturing facilities and processes, over other industry alternatives to bring premier performance and reach cost-parity with internal combustion engines.
For more than 70 years, Porsche AG has been committed to creating unique and sustainable sports cars. An industry leader in performance, Porsche has expanded its automotive offerings into electric vehicles, marrying a legacy of iconic vehicles with today’s new clean energy standards. “Despite all global challenges, we are driving forward on our future projects consistently including digitalization and electrification,” said Lutz Meschke, deputy chairman and member of the executive board of Finance and IT at Porsche AG. “Our investment in Group14 is an important step for Porsche's M&A activities. We have been actively investing in ambitious companies since 2016 and through our venture capital unit Porsche Ventures, we have gained a deep understanding of the venture capital world and are excited to lead this round.”
Cellforce Group is set to produce high-performance lithium-silicon battery cells in South Germany beginning in 2024 to be installed in electrically powered Porsche models. “The battery cells are the combustion chamber of the future. We are investing in the development of new high-performance cells with Cellforce and in the production of battery modules,” said Meschke. “As a result, Porsche has decided to partner with Group14 Technologies.”
Joining Porsche AG is a combination of domestic and international financial and strategic investors including OMERS Capital Markets, Decarbonization Partners, Riverstone Holdings LLC, Vsquared Ventures, Moore Strategic Ventures, and other large institutional investors whose expertise help to herald the next frontier of automotive performance and sustainability.
In the past 12 months, Group14 has launched a commercial-scale Battery Active Materials factory in the U.S. and broken ground on a joint venture factory with SK Group in South Korea – both to continue its mission to deliver on the electrification of everything from EVs and aviation to consumer electronics and more. To meet rising energy storage demand globally, Group14 is poised to accelerate delivery of its mass-market, drop-in ready technology, SCC55™, which is capable of turning any gigafactory into a 1.5GW facility overnight. Already validated in EV-scale batteries and for extreme fast charging applications, Group14’s technology helps leapfrog significant barriers to high-performing battery applications.
Group14 co-founder & CEO Rick Luebbe adds, “Group14 is well-positioned to elevate all batteries by enabling the transformational performance of silicon in today’s lithium-ion and tomorrow’s solid-state applications. We have been laser-focused on scaling our factories to deliver commercial quantities to customers in a mission to eradicate charge anxiety as fast as possible. With incredible support from a consortium of strategic and institutional investors led by Porsche that believe in our vision and roadmap, we can continue to advance the batteries that breathe life into the electrification of everything.”
Citi and Nomura Greentech acted as joint placement agents on this transaction.
About Group14 Technologies
Founded to enable the coming electrification of everything, Group14’s breakthrough technology for silicon batteries elevates the performance for all applications to accelerate the global transition to an all-electric future. Group14 currently operates a commercial-scale Battery Active Materials factory in Washington state with two forthcoming factories: one in South Korea as part of a joint venture with SK Group (coming online in 2022) and a second U.S. factory (coming online in 2023). To date, Group14 has raised $441 million in financing from Porsche AG, OMERS Capital Markets, Decarbonization Partners, Riverstone Holdings LLC, Vsquared Ventures, Moore Strategic Ventures, Amperex Technology Limited (ATL), BASF, Cabot Corporation, Showa Denko, OVP Venture Partners and SK materials, and is advised by Citi and Nomura Greentech.
About Porsche AG
Dr. Ing. h.c. F. Porsche AG, with headquarters in Stuttgart (Germany), is one of the most profitable car makers in the world. In 2021, Porsche delivered more than 300,000 vehicles of the 911, 718 Boxster, 718 Cayman, Cayenne, Macan, Panamera and Taycan models to customers worldwide. Thereby, Porsche’s operating profit amounted to 5.3 billion euros. The sports car manufacturer employs 37,000 people. Porsche is committed to innovation, many of the technologies have their origins in motorsport. In 2030, Porsche aims to be CO2-neutral on the balance sheet across the entire value chain and the life cycle of the newly sold vehicles.
About OMERS Capital Markets and OMERS
OMERS Capital Markets is the capital markets investment division of OMERS, one of Canada’s largest defined benefit pension plans. Capital Markets’ diverse programs, flexible investment strategies and specialized teams, including across public equities, private credit, and structured investments, enable it to pursue opportunities that don’t fit into traditional categories. Through its global Capital Solutions team, it identifies and executes on complex opportunities across a number of themes, including decarbonization, clean-tech and life sciences. Founded in 1962, OMERS manages $121 billion in net assets as of December 31, 2021. OMERS has employees in Toronto and other major cities across North America, the U.K., Continental Europe, Asia and Australia.
About Decarbonization Partners
Decarbonization Partners is a partnership between Temasek and BlackRock focused on late-stage venture capital and early growth private equity investing in next-generation companies that provide solutions and technologies to help accelerate global efforts to achieve a net zero global economy by 2050. Decarbonization Partners combines Temasek and BlackRock’s expertise in sourcing and underwriting private investments, portfolio and risk management, and sustainable technology and analytics. Decarbonization Partners looks to invest in a wide range of companies that have proven technology but need capital to scale. The partnership targets multiple sectors, including: Energy, Mobility, Manufacturing & Materials, and the Built Environment. The partnership reflects BlackRock and Temasek’s shared commitment to help build more sustainable and resilient portfolios, while also contributing to consistent, long-term financial returns that benefit their clients and stakeholders.
About Riverstone Holdings LLC
Founded in 2000 by David Leuschen and Pierre Lapeyre, Riverstone Holdings LLC is an asset management firm that invests in the private markets primarily within energy, power and infrastructure. Since inception, the Firm has raised $43 billion of capital to invest across the capital structure and in all major components of the industry’s value chain. Riverstone’s low-carbon investment franchise began 16 years ago, and has invested more than $6.6 billion in the renewable infrastructure and decarbonization categories since inception. During this time, the Firm has established industry leading, scaled companies. Within the last two years alone, Riverstone has raised more than $3 billion for over a dozen transactions involving differentiated companies that are decarbonizing critical industries.
About Vsquared Ventures
Based in Europe’s deep tech hub Munich, Vsquared Ventures is backing entrepreneurs and startups that solve some of today’s and tomorrow's most pressing problems by engineering seemingly impossible breakthrough solutions. Vsquared Ventures identifies and funds tech-driven companies with the potential to become global leaders in the biggest existing markets or create entirely new industries. Vsquared’s portfolio includes companies such as Isar Aerospace, IQM Quantum Computing, Zama.ai, Customcells, and Group14. By forming alliances with key players from industry, science, finance, and the global startup ecosystem, Vsquared Ventures enables founders to push for game-changing innovations for a better future.
About Moore Strategic Ventures
Moore Strategic Ventures, LLC is the privately held investment company for Louis M. Bacon, Founder and CEO of Moore Capital Management, LP.
OMERS Capital Markets also put out a press release announcing the investment in Group14 Technologies alongside Porsche AG:
OMERS Capital Markets today announced its participation in Group14 Technologies’ Series C US$400 million funding round. OMERS investment will be overseen by its global Capital Solutions team, which is focused on identifying and executing on complex opportunities across a number of themes, including decarbonization, clean-tech and life sciences. The team’s goals include fostering long-term partnerships with innovative companies to help them scale up and help shape the economy of the future.
“Group14’s focus on improving the performance of lithium ion batteries positions it to make a crucial contribution to the global decarbonization effort,” said Dmitry Yashnikov, Director with the Alternative Capital Solutions team, which led the transaction for Capital Solutions. “This transaction follows our earlier investment in Sweden’s Northvolt AB and entrenches us in the battery value chain. We are very supportive of the inspiring vision that Rick Luebbe and his team are working to realize,” he added.
“The investment in in Group14 is a clear demonstration of how OMERS, as a direct, long-term institutional investor, has the agility to engage with companies in ways that closely support their strategy and growth. We look forward to building similar partnerships with other cutting-edge firms in the years ahead,” said Michael Block, Senior Managing Director, Capital Solutions.
“At Group14, we are committed to elevating all batteries with the transformational performance of silicon to reimagine mobility, aviation, grid storage and beyond. We welcome the support from visionary, like-minded investors like OMERS for our Series C round and look forward to a long-term partnership to enable the electrification of everything,” said Rick Luebbe, CEO and co-founder of Group14.
OMERS was advised by Latham & Watkins, LLP.
About OMERS Capital Markets and OMERS
OMERS Capital Markets is the capital markets investment division of OMERS, one of Canada’s largest defined benefit pension plans. Capital Markets’ diverse programs, flexible investment strategies and specialized teams, including across public equities, private credit, and structured investments, enable it to pursue opportunities that don’t fit into traditional categories. Through its global Capital Solutions team, it identifies and executes on complex opportunities across a number of themes, including decarbonization, clean-tech and life sciences.
Founded in 1962, OMERS manages $121 billion in net assets as of December 31, 2021. OMERS is a jointly-sponsored pension plan, with 1,000 participating employers ranging from large cities to local agencies, and over half a million active, deferred, and retired members. OMERS members include union and non-union employees of municipalities, school boards, local boards, transit systems, electrical utilities, emergency services and children’s aid societies across Ontario. Contributions to the Plan are funded equally by members and employers. OMERS teams work in Toronto, London, New York, Amsterdam, Luxembourg, Singapore, Sydney and other major cities across North America and Europe – serving members and employers and originating and managing a diversified portfolio of high-quality investments in public markets, private equity, infrastructure, and real estate.
About Group14 Technologies
Founded in 2015 to enable the coming electrification of everything, Group14's battery materials breakthrough brings new levels of energy performance to lithium-ion-powered devices and vehicles. Recognized by the Department of Energy for its novel, drop-in ready nanomaterials and reliable industrial-scale process, Group14 serves the global transition to an all-electric future with performance for any use case. Company investors include Amperex Technology Limited (ATL), BASF, Cabot Corporation, Showa Denko and SK materials. Visit us at www.group14.technology.
Let me begin by thanking Neil Hrab of OMERS for sending me this information earlier today.
The fact that OMERS Capital Markets participated in Group14 Technologies’ Series C US$400 million funding round speaks volumes about this group.
Michael Block, Senior Managing Director, Capital Solutions states this:
“The investment in in Group14 is a clear demonstration of how OMERS, as a direct, long-term institutional investor, has the agility to engage with companies in ways that closely support their strategy and growth. We look forward to building similar partnerships with other cutting-edge firms in the years ahead.”
And Dmitry Yashnikov, Director with the Alternative Capital Solutions team, which led the transaction for Capital Solutions states this:
“Group14’s focus on improving the performance of lithium ion batteries positions it to make a crucial contribution to the global decarbonization effort. This transaction follows our earlier investment in Sweden’s Northvolt AB and entrenches us in the battery value chain. We are very supportive of the inspiring vision that Rick Luebbe and his team are working to realize.”
And Rick Luebbe, CEO and co-founder of Group14 explains the mission:
“At Group14, we are committed to elevating all batteries with the transformational performance of silicon to reimagine mobility, aviation, grid storage and beyond. We welcome the support from visionary, like-minded investors like OMERS for our Series C round and look forward to a long-term partnership to enable the electrification of everything.”
With these investments, OMERS is "entrenched" in the lithium ion battery value chain and positioning itself nicely to capitalize on the growing demand for the electrification of everything.
Like Gretzky famously stated once: "I skate where the puck is going to be, not where it has been."
The puck is headed toward a world which is decarbonizing at a rapid rate.
In order to position themselves for the energy transition, Canada's large pensions need to identify companies across their portfolios that will benefit from this transition.
OMERS global Alternative Capital Solutions team has a mandate to identify and execute on complex opportunities across a number of themes, including decarbonization, clean-tech and life sciences.
They invest in large funding rounds alongside other like-minded investors and this deal fits perfectly within their scope because it is an established company growing fast that needs capital to finance that explosive growth.
Each team has a mandate and they all invest across the capital structure at different points, some in earlier rounds, some in later rounds.
You can read more about what the OMERS global Alternative Capital Solutions team does here.
"Using our collaborative and patient approach, we make investments across equity and debt outside traditional categories and asset classes to position OMERS Capital Markets for the future. We leverage our deep sector expertise and industry relationships to unlock global opportunities in themes such as decarbonization, cleantech, automation and telecommunications. We aim to invest in tangible, asset-heavy businesses that have already passed the product commercialization stage and are seeking capital to scale up."
That's why financing Group14 Technologies and Northvolt's growth fits perfectly as part of its mandate.
If you ask me, the OMERS global Alternative Capital Solutions team is working on exciting stuff, financing companies that are going to materially alter the way we live in the future.
Below, Rick Constantino, Founder and CTO of Group14 Technologies, explains how carbon and silicon are being used to push the boundaries of lithium-ion batteries.
This is an excellent interview, Mr. Constantino is obviously a really smart guy with an interesting background. In another interview for Medium he stated this:
The thing about lithium-ion batteries — the ones in your phone or laptop or TV — is that it is powered by almost the same technology since the 1980s. As a result, we have seen small incremental improvements in energy density over the last decade or so. As we head towards the future, conventional lithium-ion powered batteries will not be enough to unlock the electrification of everything from electric vehicles to electric aircrafts.
What the team at Group14 set out to do is re-think a portion of the conventional battery starting with the anode, replacing graphite with a silicon-carbon composite to unlock up to 50% or even higher increase in energy density. While silicon has 10 times the capacity of graphite, scientists have shied away from incorporating silicon into lithium-ion batteries because the material has a tendency to expand and contract. After many iterations, we figured out a way to harness the power of silicon within a porous carbon scaffold to dramatically improve its electrochemical performance. Our flagship product SCC55™, a lithium-silicon battery material, is created through a patented two-step process to optimize battery performance across any use case. More importantly, in this “on-demand” era, we can produce SCC55™ efficiently at scale to meet commercial demand. You could take our flagship product and drop it into any current manufacturing infrastructure to produce higher-performing lithium-ion batteries today.
Across all industries, we see the same theme: how batteries can create more powerful devices. I believe SCC55™ will completely reshape how engineers think about energy storage and enable even more innovation in any battery-powered device.
Right now, we are working with battery manufacturers and their customers to improve performance and lower the cost of electric vehicles — from bikes to cars to vans and more. Our goal is to see electric vehicles at cost parity with combustion engines to accelerate the electrification of everything — not tomorrow, but today.
Like I said, really smart guy, take the time to read this interview and listen to the one below.
I also embedded another clip where he discusses how SCC55™ solves a two decade old challenge for the battery industry, enabling lithium-silicon batteries and creating step-change advancement for energy storage.
Bottom line: This investment in Group14 Technologies is a great one for OMERS and its members, and along with the one in Northvolt, it positions them well in the battery value chain which will be critical as the world moves toward decarbonization.