Recently in December 2021, Reliance New Energy Solar Ltd (RNESL), a wholly owned subsidiary of Reliance Industries had acquired 100% of Faradion Limited (FL), a British battery maker specialising in sodium-ion technology.
Now, RNEL is acquiring 100% of Lithium Werks BV (“LWB”), a Dutch Company focused on cobalt free and high performance Lithium Iron Phosphate (“LFP”) batteries.
Key points to note –
- LWB founded by prominent battery experts, was established in 2017, to enable the energy transition from fossil fuels to clean renewables.
- The Company quickly expanded through acquisitions. In February 2018, it acquired Valence Technology, followed by the industrial division of A123 in March. The acquisitions provided company with
- Stable supply of battery cells from a 100% owned factory in China, for it’s module production facilities in the US and China,
- Ownership and licenses to more than 400 patents including for the LFP battery.
- RNEL is acquiring 100% of LWB for $61 mn. This include entire operations, assets, people, customers and patents of LWB and also includes the funds for LWB’s future growth.
- For the transaction, RNEL is setting up a new Company in Netherlands (NewCo).
- Besides RNEL, Founders and employees of LWB will also hold 14.2% stake in NewCo. Whether this is part of the above $61 mn consideration or is additional, is unclear.
- LWB’s consolidated financial numbers are not disclosed. Only China’s revenue numbers have been disclosed – LW China incorporated in 2006, reported declining revenues of $9.6 mn, $17.3 mn and $24.5 mn respectively for CY 2021, CY 2020 and CY 2019.
Rationale for the transaction
For Reliance – given it’s increasing interest in the renewables space, this is one more addition to it’s portfolio.
For LWB – performance seems to be muted. Reliance provides it with the much needed backing.
What about LFP technology? Is it any good?
Tesla recently announced to be shifting some of it’s models to LFP batteries globally. This development itself should make one excited about the potential.
Technically, LFP battery is one of the earliest ones, is more affordable and has advantages of high-cycle life and safety. One major drawback however is of lower energy density than NCM or NCA cathode types making it more suitable for lower range solutions.