Growth companies see plastic waste as an investment opportunity

“Plastic waste is not just a global crisis that threatens economic recovery, the climate and nature. It’s also an investment opportunity that can turn it from a scourge into an engine for economic development, “said Rob Kaplan, who founded Circulate in 2017. Originally, the company wanted to support companies in India and Southeast Asia, such as sorting companies that are contributing to reduce the amount of plastic waste that ends up in the ocean.

In 2019, it launched a $ 106 million loan and project finance fund, the Circulate Capital Ocean Fund, backed by a handful of large multinational corporations, including Coca-Cola Co., Danone SA, Procter & Gamble Co. and Unilever PLC. It now intends to raise a $ 50 million fund to expand both its investor base and investment mandate.

Circulate is one of a small but growing number of companies investing in companies that contribute to what is known as the circular economy, a business model that aims to eliminate the waste produced by companies, continuously reuse products and materials, and regenerate natural systems . According to a report by the nonprofit Ellen MacArthur Foundation last year, an estimated 30 private market funds, including private equity, venture and debt strategies with a focus on the circular economy, were valued in the first half of 2020, up from just three in 2016.

A number of large multinationals are funding these companies’ efforts as part of a broader effort to reduce both the total waste that their own companies produce and the amount of virgin material they use.

“What is really obvious with these? [objectives] These are things that you as a company cannot do on your own, “said Richard Slater, Unilever’s chief research and development officer.” There are system changes you need to make.

Unilever, the fund managed by New York-based Circulate and Closed Loop Partners, plans to halve the amount of virgin plastic by 2025 and plans to collect and process more plastic packaging than it sells. Coca-Cola, also a supporter of Circulate’s Ocean Fund, has set itself the goal of making all of its global packaging recyclable by 2025, including using at least 50% of its recycled packaging material by 2030.

Matt Echols, global vice president of public affairs communications and sustainability function operations at Coca-Cola, said helping companies in the circular economy is as much about generating returns as it is about meeting sustainability goals.

“It’s an investment, not a gift,” he said. “We’ll look at some of them [portfolio] Companies as potential suppliers of recycled material. “

To date, Circulate has supported at least seven companies through its Ocean Fund, including Nepra Waste Management Pvt. Ltd., an Indian waste collection company, and Tridi Oasis, an Indonesian plastic bottle recycler that makes polyethylene terephthalate or PET flakes, an industrial material.

With its newest fund, Circulate expects to expand its investment mandate to the US and Europe and its strategy to include companies that manufacture technologies and materials. According to Kaplan, the new fund has already received initial commitments from non-corporate investors such as family offices.

Early support from large corporate investors can help start-ups attract other types of investors, according to Bridget Croke, chief executive officer at Closed Loop Partners, based in New York. Closed Loop, which had approximately $ 164 million in regulatory assets under management late last year, invests in private equity, venture capital, debt and infrastructure funds.

Closed Loop currently offers several funds to investors, including the Closed Loop Circular Plastic Fund, which targets recycling technologies, equipment and infrastructure businesses across North America. The company initially raised $ 25 million from corporate backers Dow Inc., Nova Chemicals Corp. and LyondellBasell Industries NV and intends to increase the fund to $ 100 million, according to a press release.

Ms. Croke said when the company started raising money for these types of investments it only had the strategic corporate investors. “We now have more family offices, private individuals and banks than we have” [corporations]”, she said.” The companies have created this security that brings more investors to the table. “

This story was posted through a news agency feed with no changes to the text

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