Jefferies, the US-headquartered investment bank, has been increasing its footprint across continental Europe, where it now has offices in Sweden, Benelux, Germany, Spain, Italy and France. A measure of its success in France was its role as sole placement agent for battery maker Verkor in a €850m private equity raising, the largest ever for a French start-up.
“Jefferies decided to meaningfully expand in France three years ago,” says Arnaud Fornas, the bank’s head of France investment banking advisory. “Today we have around 45 Paris-based bankers, half of them trading floor professionals and the other half investment bankers.”
The Paris business is a full-service investment bank, active in mergers and acquisitions, debt and equity capital markets, and private capital raising, adds Mr Fornas. Until Jefferies tempted him away three years ago to build the investment banking advisory team, he worked for HSBC in New York, London and Paris.
In those three years, Jefferies has achieved great momentum, he believes. Its recent track record in France bears that out. Among other high-profile deals, it advised Igneo Infrastructure Partners in this year’s €1.6bn sale of district heating company Coriance to a consortium of Vauban Infrastructure Partners and Caisse des Dépôts.
Our clients value our deep sector knowledge, together with our integrated and global platform.
Also this year, Jefferies was financial adviser to lab technology company Polyplus on its €2.4bn acquisition by life science group Sartorius. Last year, the bank advised French automotive data firm A2MAC1 on its €1.4bn sale to Providence Equity Partners of the US.
What accounts for the success of a US player in a market where, frankly, it helps to be French? “Our clients value our deep sector knowledge, together with our integrated and global platform,” according to Mr Fornas. “We position their equity stories better and have deeper access to strategic buyers around the world than most of our French competitors.”
Rising to the challenge
In a difficult environment, he suggests, these strengths are the best guarantee for clients to achieve the optimum outcome for their transactions. They certainly helped the Verkor team execute its record-breaking €850m equity raising in what could definitely be described as a challenging environment.
Verkor, founded by a group of industry experts in 2020 and based in Grenoble, has ambitions to become the leading European sustainable battery manufacturer. It plans to build its first factory at Dunkirk in France, with initial lithium-ion cell production of 16 gigawatt hours (GWh) in 2025, rising to 50GWh in line with market dynamics.
Its first backers were EIT InnoEnergy, an EU-backed sustainable energy investor, energy management specialists Schneider Electric and Groupe IDEC, a sustainable property developer.
In its first year, Verkor attracted €100m from investors including car maker Renault (which has since signed an offtake agreement) and EQT Ventures. Then, in late 2022, it raised another €250m from investors such as national investment fund Bpifrance, the European Investment Bank and Sibanye-Stillwater, a South African mining group that has recently been diversifying into battery metals.
Crowded market
Currently, there is a crowded field jostling to compete in European sustainable battery production. Taiwanese producer ProLogium has also chosen Dunkirk as the site for a new €5.2bn plant to make solid state batteries: safer and more durable, some say, than the liquid-based lithium-ion variety. Mercedes-Benz is one of ProLogium’s shareholders.
The German car maker, alongside French energy group TotalEnergies and Dutch-headquartered car maker Stellantis, has also invested in Automotive Cells Company (ACC), which is building a lithium-ion facility in the Pas-de-Calais.
China’s Envision Group is building a plant in the region to supply Renault. While European production is dominated by Asian producers at the moment, a notable force in the European fight-back is Northvolt, founded by two former Tesla executives, with a factory in Sweden and a second under construction.
A strong team
Jefferies has placed its bets on Verkor. When its bankers met the company’s management in the run-up to the second round of funding, they were immediately impressed.
“The management team is composed of industry veterans, with experience at companies like Tesla, Audi, BMW and Renault,” says Jean-Edouard Galliot, the senior sector banker at Jefferies responsible for critical materials for the battery industry.
Verkor CEO and co-founder Benoit Lemaignan was an energy entrepreneur before joining EIT InnoEnergy, where he worked for the partnership with the European Battery Alliance. Chief technology officer and co-founder Christophe Mille ran Tesla’s original cell prototype production line before working in cell development for Apple and BMW.
Chief customer officer and co-founder Philippe Chain was chief electric vehicle strategist at Renault, before moving to Tesla and then Audi, where he headed technical development of Audi’s first battery electric vehicles.
Mr Galliot notes the number of players in today’s European battery industry, but believes very few of them will become industry champions. “They can all have projects, but to become an industry champion you need a lot of capital and talent,” he says. “We identified Verkor as having that potential.”
Winning support
In July 2022, after a beauty parade involving “a large number” of banks, Jefferies won a mandate as sole placement agent and lead financial adviser for a major equity raise to help fund the construction of the Dunkirk factory.
Then it was Jefferies’s job to convince investors that its faith in Verkor was justified. “The challenge was not only to position the story with investors so that it resonated from an environmental, social and governance, transition and climate tech standpoint,” says Evans Haji-Touma, Jefferies’s Europe, the Middle East and Africa head of private financing solutions. “It was also to differentiate Verkor from the other European and Asian manufacturers.”
Verkor’s experienced management team constitutes one point of difference, Mr Galliot says. Another is the company’s objective to be and remain independent. “It has Renault as a customer but it wants to supply different markets,” he explains.
A third advantage is the offtake agreement with Renault, which Mr Galliot describes as “the best in the market”, competitive on cost but with unique duration. “And Verkor is making a high-performance battery that works today, not an aspirational product that could work in the distant future,” he adds.
This was a sizeable raising, Mr Haji-Touma points out, with a project finance element. “It was somewhere between project finance and a growth story: a start-up, but capex-intensive,” he says. “It was vital to find the right pools of capital: investors who would understand a business funding its first gigafactory, with its different defensive elements.”
With interest rates now much higher than they had been, the process took slightly longer than expected. “It was a challenging macro environment for raising equity of the amount we were looking for, so investors focused more on due diligence,” Mr Fornas says. “But the results demonstrated the strength of the Verkor equity story.”
Verkor raised €850m, with Macquarie Asset Management’s Green Investment Group emerging as the lead investor. This was part of a total funding package of more than €2bn, including €600m debt support from the European Investment Bank and French subsidies of around €650m, subject to European Commission approval.
The new equity investors include not only financial players but also strategic investors. Bpifrance and Sibanye-Stillwater were joined by, among others, Pulse, the energy fund of CMA CGM, the largest shipping and logistics business in France. There remains an option to increase the size of the equity raising to €1bn.
Historic fundraising
As well as funding factory construction, the proceeds will also go towards ongoing research and strategic investments across the battery value chain, creating what the company says will be “thousands” of direct and indirect long-term jobs.
The deal was of sufficient national importance for the investors to have been received by French president Emmanuel Macron at the Élysée Palace recently. He described it as “a historic fund-raising for French tech” and “a bold sign of our ambition for reindustrialisation”.
As such, the transaction can only boost Jefferies’s standing in the French market, which was one reason the team was keen to get the mandate. As Mr Haji-Touma says: “We knew how it would affect our reputation from a French investment banking standpoint.”
