Private equity firm Ara Partners has acquired GM EV battery material supplier Vacuumschmelze or VAC from another private equity firm, Apollo, for an undisclosed amount.
Ara Partners holds a diversified portfolio of companies across several sectors, but is mainly interested in “industrial decarbonization investments.”
Ara Partners notes that VAC is the Western Hemisphere’s biggest rare earth permanent magnet company and that its magnets are key elements in several high-tech, cutting-edge industrial sectors. These include the electric vehicle sector, where VAC inked a deal to launch a North American magnet plant to give The General’s EVs the locally produced materials called for by Biden administration infrastructure legislation.
VAC’s new owner says the Germany-based company can support the abatement of one gigaton of carbon dioxide over the next half-decade with its EV magnetic materials. Ara will “support the company’s next stage of growth as it expands its manufacturing capabilities in North America to drive the decarbonization of transportation” according to one of its executives.
VAC CEO Erik Eschen responded to the acquisition by pointing out Ara Partners “has a strong track record of working closely with management teams across the industrial economy to create value while achieving meaningful decarbonization benefits.” He also remarked his company will continue “pursuing a range of strategic growth opportunities to establish a robust supply chain for EV manufacturing in the Western World,” including with GM.
GM launched its partnership with VAC in December 2021, announcing that the German rare earth magnet manufacturer would help it increase production of its GM Ultium Drive motors. The alliance was one of several The General entered into around that time to expand its North American supply chain, including a new joint venture with advanced materials company POSCO Chemical and a pact with rare earth materials and alloy supplier MP Materials.
VAC and GM signed a binding agreement this January, finalizing the former’s North American magnet factory plans. The plant is expected to become operational in 2025 and will supply GM with magnetic materials for its EV motors for a minimum of 10 years after it starts production.
GM is pursuing electrification plans aggressively, with the announced intention to offer 30 EV models worldwide by 2025 and fully electrify its light-duty vehicle lineup by 2035, along with supporting the EV transition by building a fast charger network in alliance with six other automakers starting in 2024.