WRAP RECYCLING EQUITY FUND

WRAP (Waste & Resources Action Programme) has launched a £5.5 million fund for the recycling sector. The fund will be available for suitable small and medium sized enterprises at an early stage in their development. WRAP hope that the fund will help stimulate further funding from the private sector into recycling, although they will not require companies seeking funding to require match funding.

The items below are taken from the WRAP press release of 2 July 2003

Recycling equity fund opens for business - 2/7/2003

· Pioneering equity fund to meet the investment needs of the recycling sector

· Fund-raising phase closes with 50% oversubscription by the private sector

· Providing leadership to commercial investors in a high-growth sector

A £5.5m equity fund, the first in Europe to focus specifically on the recycling sector, has opened for business 50% oversubscribed by the private sector.

The Recycling Fund, established by WRAP (Waste & Resources Action Programme) and managed by Impax Asset Management, has been developed to address the gap between the availability of investment capital and the demands of small and medium-sized enterprises (SMEs) in the UK’s recycling sector. Providing leadership to the financial community, the pilot fund will also offer investors the opportunity for early sight of a high-growth sector and establish the merits of a larger, commercially-sized fund in the future.

The fund has received very positive buy-in from the private sector, with £1.5m of investment secured from WastePack, Barclays and Partnerships UK, which is a public private partnership. The Recycling Fund Ltd, a wholly owned subsidiary of WRAP has committed the remaining £4m. WRAP originally set out to secure £1m investment from the private sector, to comply with the terms of its state aid approval, but received such strong interest that it decided to increase the size of the fund.

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.”

Already worth £12 billion a year, the sector’s turnover - driven by major policy and regulatory drivers - is expected to grow to between £20bn and £30bn within 15 years. Studies conducted by WRAP indicated that recycling SMEs 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.

Running for up to 10 years, with investments being made during an initial three-year period, the fund is expected to provide equity finance to between
10 and 15 early stage recycling or waste management SMEs. 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. Co-investment will be sought wherever possible - to act as a catalyst for engaging other investors - but the SMEs will not be required to secure the match funding which has often been a major barrier in the past.

An official launch of the fund will be held in the Autumn and WRAP’s Business Development Service will hold a series of events around the country to enable businesses to engage with the fund.

Ian Simm, managing director of Impax Asset Management, commented:
“We would like to congratulate WRAP, Wastepack, Barclays and Partnerships UK in completing the launch of The Recycling Fund. This is a very exciting moment to be active in the UK recycling sector, and the Impax team has already started work to identify and analyse investment opportunities for the fund.”

Notes:

1. WRAP (Waste & Resources Action Programme) is a major UK programme established to promote sustainable waste management. Its particular focus is on creating stable and efficient markets for recycled materials and products.

2. A not-for-profit company in the private sector, WRAP is backed by substantial Government funding from DEFRA, DTI and the devolved administrations in Scotland, Wales and Northern Ireland.

3. The Recycling Fund has been developed by WRAP’s Business Development Service, which was created to assist recycling businesses in accessing commercial sources of finance.

4. The fund will invest in Small and Medium sized Enterprises (SMEs) where the principal element of the business is in, or will be in:

(a) the sorting, reprocessing or recycling of paper, glass, plastic, wood, aggregates or compostable material (including packaging waste materials);
(b) collection technology insofar as it is specifically designed to enhance the
above; or
(c) the manufacture of products incorporating recycled paper, glass, plastic,
wood, aggregates or compostable material (including packaging waste
materials).

5. Impax Asset Management (IAM) is a fund manager dedicated to the environmental infrastructure and technology sector. A wholly-owned subsidiary of Impax Group plc, whose shares are quoted on the Alternative Investment Market of the London Stock Exchange, IAM is responsible for five funds and has a strong track record of investment into early stage businesses. Impax Capital Corporation, also part of the Impax Group plc, acted as financial advisors to The Recycling Fund during the launch.

6. Barclays takes its social and environmental responsibilities very seriously and is one of the largest investors in communities in the UK. In 2002, Barclays global commitment to the community amounted to £32 million, which includes 1% of UK pre-tax profits. Our biggest environmental impact is indirect via our lending policies and procedures. In response to this, the bank established an environmental risk management unit in 1992 as a means of understanding the environmental drivers across a wide range of sectors. In June 2003, Barclays joined other major world banks in adopting the Equator Principles. Further information can be found in Barclays Social and Environmental Report and CSR news pages at: http://www.barclays.co.uk/socialresponsibility

7. The Wastepack Group is a support services company, providing outsourced solutions for recycling and waste to around 700 UK businesses.

8. Partnerships UK is a public private partnership (PPP) which can invest its own capital in PPP ranging from early stage science and technology spin-outs to larger infrastructure projects. To date, the equity arm of Partnerships UK has invested approximately £5m in three PPPs.

For further information

click here to view WRAP's media centre

Ray Georgeson, Director of Policy and Communications

Telephone : 01295 919905
Mobile : 07711 069433
Email : ray.georgeson@wrap.org.uk

WRAP, The Old Academy, 21 Horse Fair, Banbury, Oxon OX16 0AH