Swedish textile startup Syre AB plans to raise as much as $700 million in fresh funding to build a factory in Vietnam, following a supply deal with Nike Inc. that it says will help unlock new borrowing.

Syre chief executive officer Dennis Nobelius said the company has struck a multi-year agreement to supply the world’s largest sportswear group with recycled polyester. It’s a move that will also strengthen Syre’s prospects for financing, he added.

Founded in 2023 by Hennes Mauritz AB and Vargas Holding AB, the company raised $100 million in 2024 to fund its first facility in North Carolina. Nobelius says the textile supplier now plans to take a more “sequential” approach to fundraising compared to earlier Vargas-backed ventures such as bankrupt battery maker Northvolt AB.

The Nike contract is “a bankable offtake agreement meaning we can use it for project financing, for example, for the Vietnam factory,” Nobelius said in an interview.

Syre will start approaching lenders and investors in about six months, with the aim of finalising a capital raise in the region of $500 million and $700 million in about a year’s time, according to the CEO.

Those funds will be used to construct the Vietnamese plant in 2027, with production targeted for late 2029. Progress will however depend in part on the government of Vietnam finalising import licenses for textile waste, which is a key prerequisite for delivering large-scale circular production in the country, Nobelius said.

Syre, whose early customers include HM Group, Gap Inc., Target Corp., and Houdini Sportswear AB, says its aim is to operate about a dozen plants globally over the next decade, producing roughly 3 million tons of circular polyester. The startup is also backed by TPG Rise Climate, Volvo Car AB, IMAS Foundation, Giant Ventures, and Norrsken VC.

Speaking of future financing needs, Nobelius said: “We’ve adjusted our plans — it’s natural. Instead of funding several factories at once, we’re focusing on securing capital in sequence.”