Singapore-based Flow into Capital eight years in the past developed a novel strategy to tackling Asia’s rampant plastic waste downside: raise capital from corporations with each a presence within the area and enormous plastic footprints to spend money on native recycling infrastructure and capability.
For giant firms like Coca-Cola Firm and Procter & Gamble, “it was a frantic time of searching for options to ocean plastic. Our authentic fund was a superb potential partnership and answer for a lot of of them,” recalled Flow into’s Rob Kaplan.
“All of them at the moment are a lot smarter about their methods. They’re extra particular. They know the place their gaps are and are searching for clearer strategic alignment with their objectives,” he instructed ImpactAlpha.
The Singapore-based agency has raised $220 million for its second Asia-focused fund, with key strategic investments from Coca-Cola, P&G, Danone and Dow. All 4 firms backed Flow into’s first fund, which raised greater than $100 million and invested in 17 firms.
For fund two, Flow into has had conversations with Coca-Cola about sourcing recycled PET for its bottled drinks, and with Dow a couple of low-density polyethylene, which is utilized in plastic wraps and different varieties of versatile packaging. A few of its company companions have pinpointed country-specific challenges, in say, Vietnam or Indonesia.
Regional tailwinds
Asia has lengthy been the middle of the worldwide plastic waste disaster; nine of the top 10 largest producers of plastic air pollution are based mostly within the area. Policymakers had been within the early levels of creating legal guidelines and rules to deal with the issue when Flow into launched its first fund.
Now, says Kaplan, “we’re seeing numerous fairly aggressive developments on the regulatory and coverage aspect.”
India, Vietnam and the Philippines have all handed Prolonged Producer Accountability legal guidelines that mandate recycling from plastic producers and importers; Malaysia and Thailand are creating related insurance policies.
Strengthening Asia’s round economic system has taken on larger significance with the string of latest geopolitical and local weather shocks, from Covid to the struggle in Iran, which have massively disrupted world provide chains.
“Our work in Asia is absolutely about creating wholesome regional provide chains and economies in order that there’s much less reliance on world commerce,” stated Kaplan.
Proof factors
Flow into is aiming to boost $300 million for its second Asia fund. Its lengthy listing of LPs that contributed to its first shut contains Allianz World Buyers and Achmea Funding Administration, which invested on behalf of an unnamed Dutch pension fund; the Worldwide Finance Corp., the European Funding Financial institution and growth finance establishments from the UK, France, Australia, Denmark; household workplaces Builders Imaginative and prescient, Stella and Clotho; and in addition responsAbility, Wire Group and Fondation Prince Albert II de Monaco.
“The primary query that we get requested is what’s the power of the present portfolio?” says Kaplan of conversations with LPs. “We’ve proven that we are able to exit among the firms.”
Flow into’s first Asia fund has made one full exits and two partial exits. It absolutely exited Recykal, an organization in India connecting waste turbines to processors and recyclers. Its partial exits embody Tridi Oasis, a woman-led firm in Indonesia that focuses on PET plastic recycling, and India-based Lucro, which focuses on versatile plastic recycling.
Flow into is starting to see extra growth-stage alternatives within the area, Kaplan famous. “The market has matured considerably within the final 5 years.” However, he added, “there’s numerous low hanging fruit.”
Flow into has additionally expanded into Latin America, and final 12 months closed its first fund for that area.
On the affect aspect, Kaplan notes that Flow into’s portfolio has prevented an estimated a million tons of plastic air pollution and two million tons of greenhouse fuel emissions. “These numbers converse for themselves.”
Closed loop
Flow into Capital spun out of New York-based Closed Loop Companions, a personal fairness agency that invests in recycling infrastructure within the US. Closed Loop as we speak introduced a brand new funding, taking a majority stake in Seattle-based Sutter Metals. Sutter Metals helps salvage important metals like copper, brass and aluminum from digital waste and industrial waste. Its funding will help Sutter Metals’ processing functionality and attain within the US.
“The necessity for a stronger home metals provide chain has come to the forefront, with used metals and minerals an underutilized, but important provide supply,” Closed Loop stated in an announcement.
Flow into, in the meantime, is trying to help e-waste and important metallic recycling in Asia by means of its second fund.
