Closed Loop’s Circular Services expands investment with funding from major CPGs

Dive Brief:

Closed Loop Partners announced on Thursday further investment in Circular Services, a privately held company that owns MRF operators Sims Municipal Recycling and Balcones Resources. The company said combined commitments, including a prior $700 million from Brookfield Renewables, now total “nearly a billion dollars.”
The latest investments come from Microsoft, Nestlé, PepsiCo, SK Group, Starbucks and Unilever. Closed Loop declined to share specific financial details. Starbucks reported it invested $10 million.
“These capital commitments will accelerate our plans for Circular Services’ expansion,” said Closed Loop Chief Strategy Officer Jessica Long in a statement. “Our strategic partnership with these corporate partners will further strengthen our work to advance circular materials management, and increase the quality and volume of valuable materials kept in circulation and out of landfills and the environment.”

Dive Insight:

This marks the latest step in Closed Loop taking a more direct role in the recycling industry as it seeks to grow what it has previously called “the largest privately owned recycling company in North America.” The New York-based firm also runs an innovation center and asset management segments, many of which have boosted recycling infrastructure investments in recent years.

Circular Services launched in November with investments from the Brookfield Global Transition Fund and the Partnership Fund for New York City. Brookfield reported that transaction involved a $200 million investment as a preferred equity option, with the potential to invest up to $500 million more to help Circular Services “fund the buildout of its development pipeline of municipal recycling facilities.”

Brookfield took a minority position in the business as a result. Sims has also received recent investment via the Closed Loop Circular Plastics Fund. Closed Loop declined to share details about the structure of this latest investment round, describing the companies as “capital partners.”

Each of the latest investor companies had invested or partnered with Closed Loop in the past. The moves fit into a broader trend of major consumer-facing companies investing in recycling infrastructure to boost access to ponstconsumer material and, in some cases, to attempt to improve the recycling economics for certain lower-value products.

Statements from Nestlé, PepsiCo and Unilever described the need to grow access to recycled content as a motivation for their investments. Starbucks noted the move could help expand access to recycling collection at its stores, as well as facilitate further collaboration to address “packaging types with limited access to recycling programs such as Starbucks hot cup.” Microsoft noted its ongoing work with Circular Services, via portfolio company Retrievr, to work on e-scrap recycling in Denver.

At the time of its launch, Circular Services’ portfolio contained 12 facilities in seven states. Its focus includes recycling and reuse services for packaging, textiles, electronics and organics. The portfolio also contains HomeBiogas and a modular MRF business.