Dive Brief:

• Closed Loop Partners is launching Circular Services, which it says will be the largest privately owned recycling company in North America, consolidating 12 facilities from portfolio companies across seven states. Brookfield Renewables has committed up to $700 million for the new company.
• Ron Gonen, CEO of Closed Loop, will also serve as the CEO of Circular Services. The new company will offer a range of recycling services for packaging, textiles, electronics and organics by bringing together existing Closed Loop portfolio companies including Sims Municipal Recycling, Balcones Resources, Retrievr and HomeBiogas.
• The Brookfield Global Transition Fund has invested an initial $200 million in the new venture, taking a minority position, and it could invest an additional $500 million in growth opportunities. The Partnership Fund for New York City is also an investor.

Dive Insight:

Circular economy-focused investment firm Closed Loop Partners has pursued many efforts to invest in and experiment with various recycling systems since it was founded in 2014, with an increasing focus on directly owning recycling infrastructure assets. The launch of Circular Services, announced Tuesday in tandem with America Recycles Day, effectively marks a third division for the New York-based group, in addition to its existing innovation center and asset management segments.

With its 2019 acquisition of Texas-based Balcones, 2020 acquisition of Florida-based Single Stream Recyclers (which was integrated into Balcones) and early 2022 acquisition of Sims, Closed Loop now operates multiple large MRFs around the country. The U.S. recycling industry hasn’t seen a large company focused on residential and commercial recycling, without also owning landfill assets, since Republic Services acquired ReCommunity in 2017. Closed Loop said this new venture will be broader than past models.

“Reuse will continue to be part of what we we do, resell, remanufacturing. I think it's critical that if you're truly going to be in the circular economy, you can't just be in recycling,” said Jessica Long, chief strategy officer of Closed Loop and now also Circular Services.

The leadership teams at all entities involved with Circular Services will stay in place, Closed Loop said.

Long said bringing together services for organics, textiles and electronics with standard recycling is considered especially important “so we can provide a much more holistic set of services to municipalities and commercial properties.” Long noted that working on all of these areas can also improve material quality across streams, create the opportunity for more resilient end markets and have broader benefits.

“We're really bringing it all together with the ultimate goal of keeping those highly valuable materials in play as long as possible, therefore reducing the need for extraction, reducing the need for landfilling, reducing emissions associated with it,” she said.

While larger waste and recycling companies may offer collection services for various streams in certain markets, it’s still less common. Locally-based services have sprung up in multiple cities to fill the gap, though this can lead to customers dealing with multiple service providers.

Circular Services’ current organics offerings center on HomeBiogas, an Israel-based company which makes a range of modular anaerobic digestion systems. Closed Loop has the U.S. distribution rights for that technology, with a large installation underway at a New Jersey multifamily complex. Textile and electronics collection will be provided by Retrievr, which currently has programs in Philadelphia and Denver. Electronics companies ERI and Apkudo, which are also in the Closed Loop portfolio, will not be part of Circular Services.

On the packaging side, Circular Services will continue focusing on municipal contract opportunities and other ways to grow its recycling business. Sims has notable processing contracts with New York City; Jersey City, New Jersey; and Palm Beach County, Florida, among others. Balcones’ footprint includes multiple cities in Texas as well as Arkansas and Florida. The company is constructing a new MRF to service a contract in San Antonio and recently won an operating contract for two MRFs in Phoenix.

In addition to these larger-scale operations, Circular Services has a modular MRF division that can offer processing capabilities to municipalities in underserved or more rural areas. Long said these units can be much less capital-intensive than full-scale facilities — in the $1 million to $2 million range — and can potentially process 15,000 tons per year.

Brookfield, a large renewable energy company, described its investment in Circular Services as part of its overall climate ambitions. "We cannot create a net zero economy without significantly scaling the infrastructure required for a circular economy," said Natalie Adomait, managing partner and chief investment officer of the Brookfield fund, in the announcement.

Looking ahead, Long said the focus for deploying upward of $500 million will be on organic growth and potential partnerships, but further acquisitions are “always a possibility.”