Updated: Dec 31, 2019
ImpactAlpha, June 17 – Plastic waste is a global crisis. Investing to prevent plastic waste is an investment opportunity.
Circulate Capital, spun off from recycling investment fund Closed Loop Partners, is leveraging growing corporate interest in securing their supply chains and public interest in protecting the oceans to raise capital for investments in solutions to plastic waste in South and Southeast Asia.
Circulate secured a $35 million guarantee from USAID’s Development Credit Authority earlier this month. The DCA, which is slated to move into the new U.S. International Development Finance Corp. later this year, has made more than 600 such risk-sharing agreements to help unlock $5.5 billion in private financing. At least half of the loans covered by USAID’s 50% guarantee will be deployed in Indonesia, The Philippines, Vietnam and Sri Lanka.
USAID’s John Patrick (JP) Gibbons and Circulate Capital’s Rob Kaplan sat down to talk about the partnership, and the role of guarantees and blending capital in solving sustainability challenges at scale. “As a donor, USAID wants to work ourselves out of a job as quickly as possible,” says Gibbons. “Eventually we want the market to say, ‘We no longer need a guarantor in this structure.’”
For Circulate, the guarantee comes on top up of up to $100 million in equity commitments from PepsiCo, Procter & Gamble, Dow, Danone, Unilever, Coca-Cola and other corporations. “For many of our investors, too much of their packaging is polluting the environment,” Kaplan says. “They lack access to the recycled content to put back into their products. They are constantly getting accused of being bad actors and face a huge ‘license to operate’ risk.”