Launching of industrial investment projects, cautiously positive outlook for next few years

The review utilised the Confederation of Finnish Industries’ Data Dashboard, a listing of investments in the green transition. However, projects relating to the production and transmission of wind and solar power were excluded as they are regarded as having already received fairly adequate financing. Included in the review are projects that have not yet been publicly announced. The review surveyed projects associated with energy transmission, biomaterials and metals, amongst other fields.

“Arctial’s planned aluminium factory in the Kokkola area is a prime example of a new industrial project that promotes the clean transition. Typically such projects need world-class technological expertise and international financers. Tesi is involved in the project company as a local anchor investor with a minority holding,” explains Esa Koponen, Investment Director at Tesi.

Finnish anchor investors are needed because they give projects credibility and help to attract international capital.

”Industrial projects call for a long horizon and larger amounts of capital compared to many other investments. An investor’s risk can be reduced if there are multiple investors in the project who are all able to finance the project in phases over a number of different financing rounds. The role that customers and suppliers of raw materials and technology play in launching projects is considerately more important in the financing of the early stage of successful industrial projects,” points out Koponen.

The successes of new industrial projects can also be considerable: the goal is to accelerate the reduction of carbon dioxide emissions, while the best projects are expected to generate more exports and create new jobs. Social changes are accelerating demand. ”Quite clearly, global instability enhances the importance of increasing European production. More attention is also being paid to supply chains. The self-sufficiency of European industry is important for ensuring supplies of certain strategic raw materials and components,” adds Koponen.

One challenge that new industrial projects face is finding an investor to lead financing rounds, with technological expertise and knowledge of the industry’s customers as well as the ability to put together large international funding rounds. The problem is global, and competition for suitable investors tough.

“Nevertheless, Finland has certain strengths in the competition for investments: clean energy available at reasonable prices, reliable transmission networks, and an abundant supply of raw materials. We can offer industrial projects a stable investment environment,” says Tesi’s Investment Director Mikael Niemi.

“In line with Tesi’s expanded mission, we’re setting out to finance some strategically important industrial projects that promote the clean transition. We are a minority investor, but we can act as a local anchor investor, offering enhanced credibility in the eyes of international investors as well as additional funding,” continues Niemi.

The aim of the review is to identify promising new industrial projects, potential investors, and any potential challenges that projects may face. The review examined both Finnish innovations suited for industrial scaling and larger foreign industrial projects. What these companies share in common is industrial-scale production and promotion of the green transition.

Read more about the study.