Run by Impax Asset Management, the investment management subsidiary of London-based Impax Group (see letsrecycle.com story), the fund has had 4 million provided by a WRAP subsidiary and 1.5m provided by private sector investors including Barclays, Wastepack, and Partnerships UK, a public-private partnership organization.
Jennie Price, WRAP’s Chief Executive, said: “The positive response from private sector investors is a clear signal that there is money to be made in recycling. Our co-investors recognise that this is a rapidly growing sector of the green economy, and they want to be part of that success story.”
The 10-year fund has been designed to help businesses secure start-up funds, development funds or capital funds that have been unable to gain funds secured on assets or revenue streams.
Speaking to letsrecycle.com, WRAP business development service manager Bevis Watts explained: “This fund is overcoming a major barrier for small businesses which has been particularly acute in recycling. This is an emerging sector, so it is hard for companies with no track record to demonstrate a revenue stream to potential investors or secure funding against assets.”
Plans
Small recycling businesses can now apply for funds, once their business plan is investment ready, by contacting Impax directly. WRAP has also set aside some funds, through their Business Development Service, to provide help for companies to get their business plans ready.
A WRAP statement said: “Qualifying companies will be those that can demonstrate an economically sustainable market for their products or materials but face difficulty in raising commercial equity finance.”
While the fund will run for 10 years, investments will be made within the first three. Co-investment will be sought wherever possible, but the WRAP statement stressed that applications would not be required to produce match funding in their bids.
Awards
Under European State Aid rules, the maximum funding given to any one company will be around 690,000, although this varies depending on the location of the company. WRAP expects most awards to be between 200,000 and 500,000, and that between 10 and 15 companies will be successful.
From WRAP's point of view, as a market development agency, the fund has also been designed to encourage more private sector investors to get involved in the recycling sector. It could act as a pilot for a much larger commercial equity fund some time in the future, WRAP said, adding that the recycling sector is already worth around 12 billion a year and is expected to grow to a turnover of between 20bn and 30bn within 15 years through regulatory and legislative drivers.
Studies conducted by WRAP have indicated that small recycling businesses will require 1.5 billion in funding between 2003 and 2018, including “significant levels of equity investment that the market is currently failing to supply”.
Wastepack
Of the 1.5 million in the fund from private sources, 1 million will come from Wastepack, the UK's second largest compliance scheme. This money forms part of the balance of the scheme's 2001 compliance plan.
Mike Beard, director of marketing and communications at Wastepack told letsrecycle.com: “The funds that we are committing to this form part of the balance of 2001 that we ear-marked for increasing recycling. Now that this element is out of the way, we are proceeding to discussions with further projects that will further benefit recycling.”
Mr Beard added that he believed the establishment of the WRAP–Impax fund would see the development of new markets leading to the recycling of additional waste packaging material.
For more information on this fund, or for details of how to apply, contact John Forster at Impax by emailing: j.forster@impax.co.uk.
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