News & Resources | 2022

Circulate Capital Invests in India’s Deluxe to Scale Recycling of Sachets and Multilayer Plastic Waste

April 5, 2022

Singapore, 5 April 2022 – Circulate Capital, the Singapore-based investment management firm that finances innovations, companies, and infrastructure to prevent ocean plastic and climate change by advancing the circular economy, today announced that the Circulate Capital Ocean Fund (CCOF I) is investing in Deluxe Recycling Private Limited (Deluxe). Deluxe is a leading Indian plastic recycling company that recycles challenging multilayer plastics (MLP), like sachets and Used-Beverage-Cartons (UBC) into new, valuable products, such as pallets and rickshaw seats. By creating a market for MLP waste, the company expects to divert 34,000 tons per annum of waste from incineration or landfills by 2025, helping pave the way to a circular economy in India.

Typically considered of no value and very difficult to recycle, MLP waste is one of the most polluting forms of plastic packaging and, if it is collected at all, is used for fuel, incineration, or co-processing at cement plants. Deluxe has developed a scalable ecosystem for the collection of MLP by working with and paying a network of aggregators and small material recovery facilities (MRF) to collect and sort MLP waste. The company then uses proprietary, in-house developed technology to manufacture a variety of heavy, rigid products. In 2020, the company recycled 7,100 tons of MLP, making it one of the largest organized MLP recyclers in India.

Investment from the Circulate Capital Ocean Fund will allow Deluxe to expand to three new facilities across western and southern India, increasing its capacity three-fold. The Circulate Capital Ocean Fund is the world’s first investment fund focused on ocean plastics in South and Southeast Asia, created in partnership with leading global corporations, PepsiCo, Procter & Gamble, Dow, Danone, Chanel, Unilever, The Coca-Cola Company, Chevron Phillips Chemical Company LLC and Mondēlez International. As Deluxe expands, its infrastructure can be leveraged to build a circular multilayer plastics market and accelerate the development of the sector as new technology is deployed.

Rob Kaplan, Founder and CEO of Circulate Capital, said, “Difficult-to-recycle plastics like sachets, food packing and plastic wrap have remained a global challenge in the waste management and recycling sector. Deluxe’s game-changing technology and entrepreneurial know-how has enabled the company to transform these multilayer plastics into valuable products at a scale not seen before in India. Deluxe currently supplies 90% of the recycled seat board market, which means nearly every rickshaw driver sits on a Deluxe-recycled seat. The dynamism and size of the Indian market present a huge opportunity for investment in the transition to a circular economy for plastics. Deluxe is firmly positioned at the forefront of this transformation and we’re proud to be supporting their growth.”

The problem of plastic waste, especially MLP, is increasing in India, with the country generating 9.4 million tons of plastic waste annually. Only 60% of plastic waste is being collected, with 3.8 million tons leaking into the environment every year. According to the Ellen MacArthur Foundation, the circular economy development path in India could create an annual value of ₹14 lakh crore (US$218 billion) in 2030 and ₹40 lakh crore (US$624 billion) in 2050 in comparison to the current development scenario. It could reduce greenhouse gas emissions by 44% along with significant reduction in air pollution, thus contributing to health and economic benefits for society.

Jignesh Shah, Co-founder of Deluxe said: “Our ultimate mission is to create value from waste, diverting it from incineration and landfill. We are proud to partner with Circulate Capital to scale our operations and our impact. At Deluxe, we see the potential to transform India’s MLP waste into a valuable mainstream raw material, incentivizing its collection and replacing the need to use virgin plastics.”

Since establishment, Deluxe has worked with external vendors and aggregators to provide training and development in effective waste segregation as well as offtake agreements, price premiums and better standard of living for formal and informal waste pickers. Deluxe currently employs 150 full-time employees and up to 140 contract laborers, ensuring appropriate employment arrangements and contributions to pension funds. Expansion is expected to provide employment opportunities for over 100 new recycling and waste management workers

Srichakra Becomes the First Indian Recycling Company to Receive a Positive Safety Assessment from European Food Safety Authority (EFSA)

March 10, 2022

Mumbai, March 10, 2022: Srichakra Polyplast (Srichakra), India’s first food-grade quality plastic recycling company announced today that its recycled polyethylene terephthalate (rPET) has received a positive safety assessment from the European Food Safety Authority (EFSA). The announcement comes as the Food Safety and Standards Authority of India (FSSAI) is set to approve the use of rPET for food packaging, reducing the need for virgin plastics and paving the way for a circular economy for plastics in India.

EFSA evaluates the safety of substances used in food contact materials (FCM) including active and intelligent materials. The verdict from EFSA is predicated on an in-depth assessment of processes, with a focus on the suitability of the finished polymer product for packaging purposes.

The use of rPET in FCM has been heavily restricted in several Asian regions including India until recently. The move by Indian authorities signals a policy shift that will enable bottle-to-bottle recycling and will help build local circular supply chains.

With the aim of reducing, reusing, and recycling plastic waste, the India Plastics Pact was launched in September 2021 to bring together businesses, governments and NGOs and accelerate the transformation of the plastic value chain. Srichakra’s certification is a part of this ongoing movement, showcasing the company’s commitment to turn plastic waste from a scourge into a valuable resource. Srichakra’s EFSA approval comes just months after the company announced an investment of more than US$10 million into its world-class technology to upgrade and expand recycling capabilities.

Ravindra Venkata, CEO and Co-founder of Srichakra, said, “As an organization, Srichakra is committed to offering the highest grade of recycled plastic to customers in India and international markets such as Europe and the United States. We are thrilled to receive EFSA’s positive scientific opinion which is considered as a global benchmark. We are well on our path to be the first facility in India to offer premium food-grade rPET to domestic and global markets. Moreover, FSSAI’s release of guidelines for acceptance of rPET for food applications in India is an exciting development and we are looking forward to contributing to building circular supply chains in India.”

Rob Kaplan, CEO and Founder of Circulate Capital which invested in Srichakra in December 2020, commented, “This is a tremendous achievement for Srichakra that underscores its leadership in accelerating the circular economy for plastics in India. Thanks to its technology-driven approach, the company is setting new benchmarks in the recycling and waste management industry nationwide. As a strategic investor in Srichakra through the Circulate Capital Ocean Fund, we are excited to support their growth journey.”

The Circulate Capital Ocean Fund (CCOF) is the world’s first investment fund dedicated to scaling organizations and SMEs transforming the waste management and recycling industry across South and Southeast Asia. The Fund was created in partnership with leading global corporations, including PepsiCo, Procter & Gamble, Dow, Danone, Chanel, Unilever, The Coca-Cola Company, Chevron Phillips Chemical Company LLC and Mondēlez International. Srichakra is currently in conversations with multiple global fast-moving consumer goods companies regarding offtake agreements and expects to further increase capacity across its operations.

Circulate Capital Commits to the 2X Challenge, Setting a New Standard for Gender Smart Investment in the Circular Economy for Plastics

March 3, 2022

Singapore, 3 March 2022: Circulate Capital, the emerging market investment management firm that finances innovations, companies and infrastructure that scale solutions to the plastic pollution and climate change crises, announced today it has qualified for the 2X Challenge, in recognition of its significant commitment to women’s economic empowerment. Circulate Capital’s nomination was sponsored by US International Development Finance Corporation (DFC).

Founded by the development finance institutions (DFIs) of the G7 nations to shift more capital towards investments that empower women in developing countries, the 2X Challenge aims to deploy US$15 billion for gender-lens investment by the end of 2022, an ambitious new target set in 2021 after securing more than double its initial goal of US$3 billion.

Circulate Capital and CCOF qualified as a 2X Investment across three areas:

• Leadership: Women represent 60% of Circulate Capital’s senior management, as well as 40% of the Investment Committee for CCOF.
• Employment: More than 50% of the company’s workforce are women, and the company has implemented policies and programs to address barriers to women’s quality employment across recruitment, retention and career progression.
• Investments: CCOF commits that, by the end of its investment period, at least 30% of its portfolio companies will be 2X Eligible Enterprises or 30% of its invested capital will be in 2X Eligible Enterprises.

Qualification as a 2X Eligible Enterprise requires organizations to be either women-owned or founded; have a minimum of 30% representation of women in board or senior management positions; or comprise a minimum of 30% of the workforce and institute policies to address barriers to employment.

The 2X qualification is the first milestone in Circulate Capital’s Gender Smart Investing Strategy, which has been developed with USAID via its INVEST mechanism – an initiative that mobilizes private capital for better, more sustainable development results. The Gender Smart Investing Strategy will drive performance of CCOF’s portfolio and aims to set the standard for gender-smart climate investing in emerging markets.

Circulate Capital is working with global impact investment advisory firms Sagana and Catalyst at Large to support CCOF’s portfolio companies in developing action plans to support gender awareness and inclusivity across their operations, including leadership and career progression, quality employment, and products and services that enhance women’s economic participation.

In addition, Circulate Capital will develop a guide to gender-responsive investing for the waste management and recycling sector. The guide will build on insights from Circulate Capital’s efforts to empower its portfolio companies to employ gender smart practices in their business operations and strategies, and will feature toolkits, case studies, and benchmarks for the wider sector.

Ellen Martin, Chief Impact Officer, Circulate Capital, said, “We know that inclusive investing is smart investing. Not only does having more women in decision-making positions result in better climate outcomes, but there is also a clear business case for making the waste management and recycling industry more inclusive. Circulate Capital is focused as much on improving livelihoods as it is on generating returns and solving the ocean plastic pollution issue.”

“We’re proud to be recognized by the 2X Challenge for our efforts to date and excited to launch our Gender Smart Investment Strategy, a natural evolution of our investment philosophy. With CCOF poised to deploy at least $50 million in the next two years, the Gender Smart Investing Strategy aims to strengthen the performance of our portfolio while ensuring portfolio companies are attractive and safe places for all, including women, to work and thrive. Our goal is to shift gender smart investing practices to mainstream use among institutional and commercial investors.”

There is an ever-growing body of evidence that identifies the benefits gender equality offers for economic development and addressing climate change. According to a McKinsey study, closing the gender labor gap could add $28 trillion, or 26%, to annual global GDP in 2025. In addition, research by BIS found that a 1 percentage point increase in the share of female managers has led to a 0.5 percent decrease in CO2 emissions across 2,000 listed companies in 24 industrialized economies over a 10-year period.

Suzanne Biegel, founder of Catalyst at Large and global leader in gender-smart investing, said, “Women have a critical role to play in climate change mitigation and adaptation. Women are innovators, leaders, entrepreneurs, workers and customers in climate-related fields, but they remain underrepresented in key decision-making positions and as users of capital. The 2X Challenge allows more capital to be directed to the organizations that are leading the charge in women’s empowerment in developing countries, which encompass those most at-risk from the effects of climate change. I’m pleased that Circulate Capital has been recognized as one of these leading organizations and look forward to working together to demonstrate how gender diversity supports business performance in partnership with its portfolio companies.”

Circulate Capital Invests in “Prevented Ocean Plastic Southeast Asia” to Expand Recycling Infrastructure and Prevent Plastic Pollution in Indonesia

January 11, 2022

Singapore, 11 January 2022: Circulate Capital, the Singapore-based investment management firm that finances innovations, companies, and infrastructure to prevent the flow of plastic waste into the world’s oceans and advance a carbon neutral circular economy, today announced that the Circulate Capital Ocean Fund (CCOF) is investing in Prevented Ocean Plastic Southeast Asia. This plastic waste collection and recycling company is pioneering and testing an innovative supply chain model for the management of plastic waste.

A unique partnership between PT Polindo Utama (Polindo), Bantam Materials Ltd (Bantam Materials) and Circulate Capital, Prevented Ocean Plastic Southeast Asia commits to strategically expand recycling infrastructure to underserved communities across Indonesia to prevent plastic leakage and support local livelihoods.

The company’s ambition is to develop a scalable and sustainable model that sets the standard for industry best practice in Southeast Asia by leveraging:

• Polindo’s 20 years of experience on the ground in establishing and managing plastic collection and aggregation infrastructure;
• Bantam Materials’ access to premium markets and expertise in governance and traceability via its proven Prevented Ocean Plastic program; and

Circulate Capital’s strategic investment and expertise in scaling innovation and driving growth. With more than 124 million people – 45 percent of Indonesia’s population – living outside of the country’s economic centre in Java, and with more than 17,000 islands, it’s generally too expensive and difficult to collect waste from islands outside of the main population centers. The investment from CCOF will fund a network of 12 new high-volume collection centres and three new aggregation centres to be established in select coastal communities in need across Indonesia, with a particular emphasis on Kalimantan and Sulawesi islands.

Prevented Ocean Plastic Southeast Asia will combine the unique strengths of each partner to deliver localized infrastructure providing certified and traceable premium quality recycled plastic to global markets, driving environmental, social and economic value from the bottle collector to the end consumer. Its model aims at streamlining logistics processes and enabling the pooling of collection volumes to maximize efficiency and reduce costs. Furthermore, the centres will be underpinned by the Prevented Ocean Plastic program’s market-leading collection and recycling process. Prevented Ocean Plastic Southeast Asia will produce traceable recycled PET (rPET) that complies with international standards and is trusted by global brands.

Over a 10-year period, the venture estimates it will help prevent 400,000 tonnes of plastic from entering the ocean, avoiding 800 000 tonnes of GHG emissions while also creating 1,000 direct jobs and supporting new income opportunities for thousands of bottle collectors.

“The reality of trying to collect plastic waste across 17,000 islands has compounded the plastic pollution crisis in Indonesia — there are just too many logistical challenges and complexities within the recycling value chain,” explained Rob Kaplan, Founder and CEO, Circulate Capital. “We are excited to invest with Prevented Ocean Plastic Southeast Asia to build a unique network of collection and value-addition to efficiently address those challenges and meet the ready offtake market for high quality and traceable recycled plastic. This project has the potential to be a blueprint for best-in-class recycling and circular economy infrastructure across Southeast Asia.”

Indonesia’s rapid population growth and economic development is contributing to an exponential increase in plastic consumption. While the plastic waste management and recycling systems in the major wastesheds of Jakarta and Surabaya on Java Island are relatively established, smaller cities in Java and other islands across Indonesia lack efficient collection and recycling infrastructure, resulting in high levels of plastic pollution and greenhouse gas emissions. 72 percent of Indonesia’s total plastic pollution originates in rural regions and small-to medium-sized cities, yet collection rates in rural and remote regions are only 20 percent or less .

Commenting on the announcement, Daniel Law, CEO, Polindo, said, “We are proud to take our long-term partnership with Bantam Materials to the next level thanks to Circulate Capital’s support. This partnership will enable us to develop waste collection infrastructure to meet the growing demand for traceable plastic while also supporting in need communities outside of Java. We believe there is an opportunity to overcome and optimize the complex collection and sorting logistics in remote areas of Indonesia, and in doing so, deliver better income opportunities and incentive models that help mobilize informal waste collection and reduce the plastic that enters the ocean.”

Raffi Schieir, Director of Bantam Materials UK, said, “Prevented Ocean Plastic Southeast Asia has the opportunity to deliver substantial impact for in need communities across Indonesia who have never had access to recycling infrastructure. There is already an increasing global demand for high-quality, traceable plastic as governments in Europe and international markets mandate the use of recycled plastic in packaging and products. By developing this infrastructure in line with the international quality and governance standards and following the fully traceable and trusted Prevented Ocean Plastic programme, we can lead the charge to transform Indonesia’s plastic waste management industry, prevent ocean plastic at scale and foster greater social and financial inclusion.”

Prior to receiving funding, the Prevented Ocean Plastic program established a flagship collection centre in Bali to trial the business model. To date, the centre has delivered benefits through job creation, plastic collection at scale and improved livelihoods of the waste workers and their community.