Last Friday WRAP, the Waste and Resources Action Programme, unveiled what it termed a new “marriage service” to deliver investment in recycling. WRAP held a conference in London to reveal its plans which aim to challenge views within the financial community that recycling businesses are unattractive.
Dr Bevis Watts, WRAP's business development services manager, said that the waste and recycling businesses can be seen as unattractive due to a lack of market information, the fact that specialised working capital and assets have low collateral value and because they provide returns over a longer term than other sectors.
Dr Watts told letsrecycle.com: “The financial community is very wary that the macroeconomics don't stand up. The issue is largely down to economies of scale, a lot of things will be too small, below their radar.”
At the conference WRAP revealed that its financial work will aim to “raise the game” for businesses and it will work with them whether they are engaged in recycled product manufacturing or involved in feedstock, and even in the manufacture of equipment for use in recycling.
Beyond improving access to traditional sources of finance, WRAP's business team will be reviewing and consulting widely on how new financial mechanisms may assist those needing new capital investment. And, WRAP could use signficiant amounts of its own funds to facilitate the creation of such mechanisms.
Complicated
Senior financial and banking officials, present at the launch of the new WRAP service have told letsrecycle.com of their interest in the work. One said:
“This is a very complicated sector and the WRAP event helped make the relationship between the national players, smaller companies and the value chain much clearer.”
Another, who also chose not to be named, remarked that there was a growing awareness of the waste and recycling sector within the financial community. “The work of WRAP will help develop our interest although there still remains a view that waste businesses are not as attractive as manufacturing businesses.”
Dr Watts gave an example of what would happen should a business apply for financial help to WRAP. The first step would be for Dr Watts and a member of the WRAP materials team to see whether the company's plan was in principle a “good idea”.
Then a project team would be formed and consultants brought in. From there various forms of financial support could be considered. Dr Watts said there were three main options. One is through simple networking to obtain regional venture capital support. A second would to get a range of project investors involved to develop the company to the point where it was ready to go for full scale financial support. A third would be for a company which was “in trouble” and where some restructuring support could be given.
Investment workshops
Companies and organisations interested in finding out more about the Business Development Service can attend any of 11 Investment Workshops to be held throughout England, Scotland and Wales during February and March 2002. For details of the venues, see page 2.
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