Singapore-based investment management company Circulate Capital has announced that its Circulate Capital Ocean Fund (CCOF), the world’s first fund dedicated to the ocean plastic crisis in South and Southeast Asia, made its inaugural investments in two plastic recycling companies located in India and Indonesia.
The investment involved a total amount of US$6 million. The two companies are Lucro Plastecycle Private Limited (Lucro) in Mumbai, India and PT Tridi Oasis Group (Tridi Oasis) in Jakarta, Indonesia.
Both companies are actively working to build markets to collect and recycle local plastic waste into raw materials that can become tradable commodities, said Circulate Capital. Lucro collects, sorts and recycles difficult-to-manage flexible plastic into recyclates, both for use in its own production and that are sold to third parties.
Tridi Oasis specialises in recycling PET bottles into rPET flakes, which are used to manufacture packaging and textiles.
CCOF, launched in December 2019, is one of the ten largest ASEAN-based Venture Capital Funds in the market. The fund is backed by leading brand owners such as PepsiCo, Procter & Gamble, Dow, Danone, Chanel, Unilever, Coca-Cola Company, and Chevron Phillips Chemical and has a war chest of US$106 million. Next to committing capital, each of these investors also contributes technical and procurement expertise to help these companies scale and connect with the supply chains of global manufacturers.
The investments made by CCOF will help to build markets and circular plastic value chains that prevent plastic leakage and support local communities. “India and Indonesia have a great opportunity to reduce the amount of plastic waste that leaks into our oceans, by investing in their highly fragmented waste and recycling industries,” said Circulate Capital founder and CEO, Rob Kaplan.
However, a recent Ocean Conservancy Report identified a net financing gap between the available private capital and the resources needed by Asia’s waste industry systems of between USD$28 and USD$40 per ton for plastic waste collection in the five top ocean polluting countries in the world – China, Indonesia, Philippines, Thailand and Vietnam. By providing debt and equity financing to South and Southeast Asian start-ups and SMEs focused on preventing plastic pollution and promoting the circular economy, CCOF aims to address this gap.
In addition, Circulate Capital is supporting these companies to manage the direct consequences of the COVID-19 crisis on their businesses, while also providing access to short-term lines of credit when possible, Kaplan explained.
“If the current health and economic crisis has taught us anything, it’s that we need to future proof our local supply chains and economies,” he said. “The resilience of critical infrastructure like waste and recycling goes hand-in-hand with protecting the health and livelihoods of our communities. By investing in small and medium-sized businesses that reduce plastic pollution and advance the circular economy, we can build sustainable businesses that can endure through a crisis.”