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Singapore-based investment management firm Circulate Capital has invested in Indian plastic recycling company Deluxe through its $112-million Circulate Capital Ocean Fund (CCOF I), which was created in partnership with global corporations like PepsiCo, Procter & Gamble, Chanel, Unilever and The Coca-Cola Company, among others.
While the firm did not disclose the investment amount, Rob Kaplan, Founder and CEO of Circulate Capital, told BusinessLine that the average ticket size of their investments is $2-10 million. Deluxe recycles multilayer plastics (MLP) like sachets and used beverage cartons into new, valuable products such as pallets and rickshaw seats.
Deluxe says it has developed a scalable ecosystem for MLP collection by working with a network of aggregators and small material recovery facilities (MRF). The company uses proprietary in-house technology to manufacture a range of heavy and rigid products. In 2020, the company said it recycled 7,100 tonnes of MLP. Deluxe will use the funding to add three new facilities in western and southern India, which will increase its capacity three-fold.
Jignesh Shah, Co-founder of Deluxe, said, “Our ultimate mission is to create value from waste, diverting it from incineration and landfill. We are proud to partner with Circulate Capital to scale our operations and our impact. At Deluxe, we see the potential to transform India’s MLP waste into a valuable mainstream raw material, incentivising its collection and replacing the need to use virgin plastics.”
The company says that since its inception it has worked with external vendors and aggregators to provide training in waste segregation as well as offtake agreements, price premiums and better standard of living for formal and informal waste pickers. Deluxe currently has 150 full-time employees and 140 contract workers. The planned expansion is expected to add over 100 new recycling and waste management workers.
On the nature of support that Circulate Capital offers investee companies, Kaplan said, “the primary goal is to help companies access exciting new markets, in partnership with our corporate investors. We talk about it as a strategic supply chain investment strategy, where we are supporting these companies to help them get qualified and become a supplier to one of our corporate investors such as Unilever or Pepsi. That’s obviously the biggest strategic value, but we do a lot of work in helping these companies professionalise, improve their quality control, quality assurance, and build out their teams, to reach those international standards.”
The Deluxe investment is the seventh for Circulate Capital in India. The firm had allocated 50 per cent of Circulate Capital Ocean Fund I to India and the other half to Southeast Asia, with a focus on Indonesia, Thailand, Philippines, and Vietnam.
Kaplan stated that “India has been by far our most exciting markets that the firm has invested in. it’s a function of tremendous entrepreneurs, strong regulatory support and just the number of companies that are poised for growth, which is a great fit for our capital strategy”. The other six Indian companies in the Circulate Capital portfolio include Srichakra Polyplast (Srichakra), Rapidue Technologies (Recykal), Deeya Panel Products (Ricron), Dalmia Polypro Industries (Dalmia), Lucro Plastecycle (Lucro) and Nepra Resources Management (Nepra)
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