Investment in circular economy rises sharply
Investment is increasing in Britain’s circular economy in response to consumer attitudes to environmental and ethical issues.
A report by accountancy and business advisory firm BDO shows annual deal volumes grew by two-thirds (64%) from 72 in 2020 to 119 in 2021 and the average disclosed transaction increased from £7 million in 2018 to £9.3m.
Analysts expect this trend to continue to the end of 2022, with 80 investments already in the first half of 2022 and more than £500m of capital invested.
The Investment into the UK Circular Economy report found growth capital investor, BGF has been the most active UK circular economy investor over the past four years with 12 deals completed in the sector.
BDO’s research found 33% of circular economy deals have been done in the manufacturing and industrials sector, another third have been in food and drink, and 22% have been in retail, leisure and consumer markets.
Rory McPherson, corporate finance partner at BDO, said: “With ESG firmly on the agenda, it’s clear the circular economy encourages economic innovation and growth – driving disruption across all traditional sectors, and therefore creating value within those industries.
“The opportunities for entrepreneurs in the sector and investors looking towards it are significant.”
Todd Mills, assistant director, added: “There is growing recognition from investors that circular economy principles can deliver both environmental and economic benefits.
“This is reflected in the sharp increase in circular economy investments in 2021, with entrepreneurs and investors partnering to deliver innovative business models that reduce waste and inefficiencies.
“With levels of available private equity capital in the UK at an all-time high, more and more investors are turning to the circular economy and we expect 2022 to be another record year.”