A Kingspan-backed Swedish low-carbon steel company is making urgent efforts to raise €975 million to shore up its funding and progress the building of a key plant in the north of the country.
The Cavan-based insulation company invested in Stegra, a Stockholm-based firm then known as H2 Green Steel, in 2021. It said at the time that it expected to end up with a single-digit percentage stake in the business.
Reports at the time said Kingspan was committing €25 million to the company in an initial funding round, alongside investors including truck maker Scania, a foundation linked to homeware retailer Ikea and carmaker Mercedez-Benz.
An outlay of that scale by Kingspan equated to just 0.4 per cent of its revenues and 4.4 per cent of its net profit for 2021.
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Kingspan, led by chief executive Gene Murtagh, referenced the investment in its latest annual report, for 2024, saying it reflected its intention to establish a long-term supply agreement to meet a share of its future steel requirements.
The Financial Times reported on Monday that the risk of insolvency was discussed at a Stegra board meeting last week on the advice of the group’s lawyers after delays and cost overruns affected the plant it is building in northern Sweden. It cited a source as saying that equity investors were “beginning to accept that they’re almost certainly going to be wiped out”.
Several European so-called green steel projects — in which furnaces are either electrified or powered by carbon-free hydrogen instead of coke or coal — have been abandoned or delayed in the past year as high energy costs make the low-carbon alloy too expensive for many customers.
Stegra said last year it had secured €6.5 billion in funding for the plant, which is under construction in the northern Swedish coastal town of Boden and will use hydrogen made on-site from renewable electricity in its production process.
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Stegra’s group chief executive Henrik Henriksson said the new financing round aimed to fund higher project costs and offset some state grants that the company had been counting on but failed to secure. The additional funds, which will comprise equity and debt, will boost the group’s financial buffers, he added.
He said that Stegra has secured initial equity commitments from both founders and lead investors.
“We expect that this will carry us through the completion of the factory and the scaling up of volumes,” a spokeswoman for Stegra said.
A spokesman for Kingspan declined to comment on the size of the company’s stake in Stegra or if it planned to provide fresh equity. - Additional reporting: Financial Times, Reuters
