OMERS Takes Part in Redwood Materials' $1 B Series D Funding Round
Redwood Materials, the battery and e-waste recycling startup founded by former Tesla
Chief Technology Officer JB Straubel, announced Tuesday that it has closed a $1 billion funding round to expand operations in the U.S.
The company takes spent electric vehicle batteries, breaks them down and uses the metals from them — including nickel, copper, cobalt and lithium — to produce new components that can go into EV batteries.
One of Redwood’s major goals is to produce battery components domestically to reduce some of the global trade and geopolitical risks around the EV industry. Redwood also aims to use as much recycled material as possible to reduce the environmental effect the auto industry transitions from internal combustion vehicles to battery electrics and hybrids.While Redwood initially focused on recycling, it also engages in refining and re-manufacturing, and adds what it calls sustainably mined materials into its products as needed, Straubel told CNBC earlier this year.
As CNBC previously reported, earlier this year, Redwood locked in a $2 billion loan commitment from the U.S. Department of Energy. It plans to use its funding to expand operations in the U.S., including in and beyond its base in Carson City, Nevada, and has announced plans to build a Battery Materials Campus outside Charleston, South Carolina.
U.S. Secretary of Energy Jennifer M. Granholm has identified domestic production of batteries and components as one way to meet growing demand for EVs, generate jobs and accelerate a transition from fossil fuels to renewable and clean energy.
Fossil fuels are the dominant form of energy utilized in the world today, and account for a majority of man-made CO2 emissions and other toxic air and particle pollutants that are driving climate change and its effects, including more frequent, more extreme weather events.
According to the Energy Information Administration, despite the growing share of EVs on the road, gasoline, excluding fuel ethanol, still accounted for 52% of total energy consumption by the U.S. transportation sector in 2022.
North America’s battery manufacturing capacity is expected to grow to nearly 1,000 Gigawatt hours per year by 2030, according to research from Argonne National Laboratory.
For its new growth funding round, Goldman Sachs Asset Management, Capricorn’s Technology Impact Fund and other unnamed funds advised by T. Rowe Price Associates led the deal, according to a company statement. The series D round of equity funding brings Redwood’s total capital raised to nearly $2 billion. OMERS, heavy equipment maker Caterpillar Inc., Microsoft’s Climate Innovation Fund and Deepwater Asset Management also invested in the round.
Earlier today, I read a press release stating Redwood Materials raises over $1 billion in Series D investment round, with participation from OMERS:
Redwood is pleased to announce the completion of our most recent equity funding round, in which we raised more than $1 billion in Series D shares. The round which was co-led by Goldman Sachs Asset Management, Capricorn's Technology Impact Fund, and funds and accounts advised by T. Rowe Price Associates, Inc. We will use our Series D funding to continue building our capacity, expanding the domestic battery supply chain and allowing our customers to purchase battery materials made in the US for the first time.
We are relentlessly focused on expanding our collection of end-of-life batteries, increasing our refining capability to recover higher quantities, and harnessing their value to make the most sustainable products. This approach stands as the cornerstone of our strategy as we scale our battery material production capacity. With this additional capital, we'll continue to assemble an industry-leading technical team, ensuring top-notch execution in sustainable battery materials production.
To date, Redwood has now raised nearly $2 billion of equity capital along with an additional $2B loan commitment
We thank our existing strategic and financial investors, many of whom participated in this round, for their continued confidence and dedication to our mission. Additionally, we welcome new investors, including OMERS, Caterpillar Inc., Microsoft’s Climate Innovation Fund, Deepwater Asset Management, among others, who will help bring us closer to creating a closed-loop battery materials supply chain to power our sustainable future.
From our lead investors:
Goldman Sachs Asset Management:
“As the electrification megatrend continues to accelerate, building a local sustainable battery materials supply chain is more important now than ever. We believe the Redwood team is well-positioned to become a leader in the battery materials industry. We look forward to working with the company in the coming years and leveraging our firm’s global platform to support Redwood’s growth, which we believe will play an important role in the ongoing energy transition.”- Sebastien Gagnon, a Managing Director in Private Equity within Goldman Sachs Asset Management
Capricorn’s Technology Impact Fund:
"Having invested in electric cars and airplanes, battery technology, and power electronics for over two decades, we've had a front-row seat to the evolution of clean energy technology and electric mobility. Redwood Materials emerges as one of the most pivotal companies in this space. Our journey with JB, beginning with his transformative work at Tesla, feels like it's come full circle with our investment in Redwood. Their commitment to creating a sustainable battery materials supply chain is not only an impressive continuation of that legacy but also a crucial step for our clean energy future."- Dipender Saluja, Managing Partner, Capricorn’s Technology Impact Fund
T. Rowe Price Associates:
“An important element of growth stock investing at T. Rowe Price involves identifying and investing early in companies with potential to reshape the future. The shift to clean energy and electric mobility undoubtedly presents such an opportunity. Redwood’s vision, leadership, and execution places it at the forefront in this emerging sector. With its commitment to creating a sustainable battery materials supply chain, we believe Redwood can be a durable growth company and help catalyze the next phase of clean energy adoption and deployment.”- Joe Fath, Portfolio Manager, T. Rowe Price Growth Stock Fund
On LinkedIn, Dmitry Yashnikov, Managing Director and Head of Green Tech at OMERS posted this:
Excited to announce our first investment in the battery recycling space!
OMERS participated in the US$1 billion financing round announced today by Redwood Materials. We are proud to partner with the team led by JB Straubel on their mission to build a circular supply chain to power a sustainable world and reduce consumption of fossil fuels.
“Thank you” to my colleagues in the GreenTech team and other OMERS colleagues – it’s great to be adding to our existing battery investments in Northvolt and Group14 Technologies.
“Thank you” also to our counsel Orrick, Herrington & Sutcliffe LLP for their support and advice!
I will keep my comments brief.
Redwood Materials will play a critical part in the growing EV batteries space.
The lead investors and new investors including OMERS, Caterpillar Inc., Microsoft’s Climate Innovation Fund and Deepwater Asset Management tells me this was a very competitive series D funding round.
Hats off to Dmitry Yashnikov and his team at OMERS who took part in this funding round.
Just like their investment in Stockholm-based Northvolt, this investment in Redwood Materials will allow the company to grow its operations and expand the domestic battery supply chain.
From all the comments, I agree with Sebastien Gagnon, Managing Director in Private Equity within Goldman Sachs Asset Management:
“As the electrification megatrend continues to accelerate, building a local sustainable battery materials supply chain is more important now than ever. We believe the Redwood team is well-positioned to become a leader in the battery materials industry. We look forward to working with the company in the coming years and leveraging our firm’s global platform to support Redwood’s growth, which we believe will play an important role in the ongoing energy transition.”The energy transition economy is huge, it provides investors with a long investment horizon ample opportunities to benefit from it and this is just another example.
It won't happen overnight which is why OMERS and other large Canadian pension investment managers are starting to fund these revolutionary companies early on.
Below, Redwood Material CEO JB Straubel speaks to CNBC's Phil LeBeau on why US-sourced EV batteries are still far away.
He states: "These are capital intensive projects" and "we are in competition with Asia to ramp this up and bring these supply chains and manufacturing operations back to the US."
I also embedded an older clip where Redwood launched the most comprehensive electric vehicle battery recycling program, beginning in California, to establish efficient, safe and effective recovery pathways for end-of-life hybrid and electric vehicle battery packs. Ford Motor Company and Volvo Cars are the first automakers to directly support the program, but they will accept all lithium-ion (Li-ion) and nickel metal hydride (NiMH) batteries in the state and welcome other car manufacturers to join in this effort.
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