WRAP pulls plug on 5.5 million Recycling Fund

The Fund, which was supported by the packaging waste compliance scheme Wastepack, Barclays Bank and Partnership UK, did not perform in line with original expectations.

But since then, a surge of interest in the recycling sector by private investors has – perhaps ironically – brought about the demise of the Recycling Fund.

WRAP chief executive Jennie Price explained that European State Aid rules meant the fund was only able to invest in recycling businesses that had already been turned down by commercial equity providers.

Decision
Speaking today at WRAP's annual open meeting in London, Mrs Price said: “It has become clear that the Recycling Fund will not be in a position to fulfil its original objective, which was to invest 5.5 million in 10 to 15 start up businesses and SMEs within an initial three year period. Following discussions with the co-investors and fund managers, therefore, the decision has been taken to terminate its activities.”

WRAP's three other investment support schemes – the eQuip lease guarantee scheme, the Business Development Service and the capital grants for new infrastructure programme – remain unaffected by the announcement.

Investment
Since its launch in 2003, the Recycling Fund has invested 828,000 within two companies – an end-of-life vehicle recycling firm and a construction and demolition waste specialist.

However, as these companies grew, they required additional capital which the Recycling Fund was unable to provide – because of State Aid rules. The companies have since been bought out by new owners, with the result that the investment has been lost with no return to the original equity investors in the businesses, including the Recycling Fund.

Nevertheless, Mrs Price said the activities of the fund managers had helped improve the viability of many of the businesses that had sought support within the Fund. At least eight had gone on to raise commercial finance, she said.

And, Mrs Price said most of the original 4 million allocation of the fund from WRAP remained intact.

Business support
As for the remaining components of WRAP's business support unit, Mrs Price said progress had been “highly encouraging”.

WRAP's eQuip scheme, which provides a guarantee for financiers against the risk of loaning money for recycling businesses to lease equipment, has delivered over 10 million of new investment since its launch in 2004. The Business Development Service has secured nearly 6.5 million of private investment in four years.

And, WRAP's capital grants for new infrastructure have leveraged almost 49 million of private capital in the last two years.

However, the organisation is now talking to the government regarding how best to bring in further private investment in recycling.

Mrs Price said: “There is still a need to support the recycling sector in securing commercial investment and we are currently in discussions with Defra and the Devolved Administrations on the best ways to achieve this.”