Dive Brief:

• Circular Services, a private recycling company owned by Closed Loop Partners, is expanding into organics through its acquisition of Connecticut-based Quantum Organics last week. Quantum runs an anaerobic digestion and composting facility in Southington.
• Separately, Closed Loop Partners on Monday announced a new investment from Capricorn Investment Group in its capital management arm. Closed Loop Capital Management has made 85 investments in circular solutions in a variety of sectors to date.
• The two announcements position Closed Loop's business for growth. "We are excited to partner with Closed Loop Partners and look forward to working with their team as they further expand the asset management business over the coming years,” William Orum, partner at Capricorn, said in a statement.

Dive Insight:

Founded in 2014, Closed Loop Partners has three main arms. Circular Services is its private recycling and circular economy services provider, Closed Loop Capital Management is its investment group and the Center for the Circular Economy is its research and innovation venture.

Circular Services was created in 2022 through a partnership with Brookfield Renewable. The latter pledged an initial $200 million investment with an additional $500 million committed to help the platform grow. 

Circular Services includes the assets of previously acquired businesses like Balcones Recycling and Sims Municipal Recycling, which combined in November 2023. The business operates more than 20 MRFs nationwide, including in Texas, New York, New Jersey, Florida and Illinois. 

Three of those MRFs — in Brooklyn and Rockland County, New York, and Jersey City, New Jersey — are close enough to present cross-selling opportunities with Quantum, said Closed Loop CEO Ron Gonen in an interview. With Quantum Organics, Circular Services is taking a big step into the world of organics recycling. 

"Most homes ... have very little garbage that would need to go to a landfill," Gonen said. "The more that we can build a service provider that can be a sustainable and cost-effective outlet, the more they're going to be interested in our service."

Financial terms of the Quantum deal were not disclosed. The Connecticut organics campus is permitted to process 100,000 tons of food waste and 500,000 tons of yard waste annually. Closed Loop also acquired Supreme Forest Products, a mulching and wood waste company, through the deal.

Quantum has been actively exploring growth opportunities, including by bidding for operation of a full-scale composting facility in Preston, Connecticut, as part of a consortium. That bid process remains ongoing.

"We are thrilled to join Circular Services," Brian Paganini, vice president and managing director of Quantum Organics, said in a statement. "Being part of Circular Services allows us to scale our vision of turning organic waste into a valuable resource while addressing pressing environmental challenges. Together, we're not just managing the materials, we're redefining their potential."

Gonen said Circular Services would continue to look for opportunities to invest in organics recycling capacity, both through acquisitions and organic growth. He plans to do that by continuing to focus on key strategic markets where the company already operates and relying on existing hauling partners.

The organics recycling space has gone through growing pains in the last five to 10 years, Gonen acknowledged. Investment appears to have shrunk after reaching a peak in 2022, according to food waste solutions nonprofit ReFed. And some in the sector say investors need to gain a better understanding of the industry in order to scale effectively.

“Sometimes as industries grow [they] have to go through those bumps and bruises during that first stage,” Gonen said. “I think the industry is now moving toward that next level of growth and is able to use those learnings.”

Gonen also praised Capricorn in a statement accompanying the announcement, saying the investor has an "impressive track record" backing climate-focused ventures over its 12 year existence. Tazia Smith, managing partner and CEO of Closed Loop Capital Management, said the investment is a sign of "market-driven tailwinds behind the circular economy.

"Together, we are positioned to expand our proven ability to identify and scale innovations, business models and infrastructure that perpetuate circularity with resilient profitability and net-positive social and environmental outcomes,” she said in a statement.