Future Returns: Impact Investing Firm Expands to the Oceans of Latin America and the Caribbean | Kanebridge News
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Future Returns: Impact Investing Firm Expands to the Oceans of Latin America and the Caribbean

By ABBY SCHULTZ
Wed, May 24, 2023 8:46amGrey Clock 4 min

The Singapore-based impact investing firm Circulate Capital launched a US$65 million initiative on Tuesday to reduce plastic pollution in Latin America and the Caribbean.

The strategy builds on Circulate Capital’s efforts in South Asia and Southeast Asia to spur the so-called circular economy by investing in companies that turn waste into usable products. Circulate Capital Ocean Fund, which had its first close in 2019, today has US$112 million in assets.

Backing the Latin America and Caribbean initiative are major global corporations, some of which also invested in its previous financing. Among these investors are Paris-based Danone, Michigan-based Dow, and London-based Unilever, companies that depend on sourcing recycled plastic material to meet their own sustainability commitments.

The Inter-American Development Bank Group’s IDB Lab also invested, and, in fact, encouraged Circulate Capital to take its approach to Latin America and the Caribbean, says Rob Kaplan, the firm’s founder.

Wealthy individuals and family offices also have taken an interest in financing the circular-economy approach to the ocean, including Builders Vision, a philanthropic and impact investing platform founded by Lukas Walton—grandson of Walmart founder Sam Walton. Builders Vision has been a longtime supporter of Circulate Capital, which was created in 2018 by Kaplan, a former director of sustainability at Walmart.

After initially learning of Circulate Capital’s approach for reducing plastic waste, Builders Vision realised it needed to back its effort aggressively, says James Lindsay, principal at Builders Vision. Their goal is to make investing in the ocean as popular for investors as investing in clean-tech solutions for the energy transition from fossil fuels.

Ocean health is one of three areas of investing today for Builders Vision, in addition to climate and energy, and food and agriculture, given the critical role oceans play in climate change and the global food supply.

“It’s a major focus and we want everyone to go look at the ocean sector like it’s completely investable, with market rates of return, just like we would with clean tech or sustainable real assets,” Lindsay says. An endowment or foundation may easily be able to include a clean-tech fund in its portfolio, but with “oceans there’s still a lot of hesitancy.”

There are good reasons for that, Lindsay says. One is that there are few companies that have been sold or gone public and thus been able to return money to investors. That’s started to change in the last two years, and Circulate Capital’s investments are part of that story, he says.

Penta recently spoke with Lindsay and Kaplan about Circulate Capital’s latest initiative, and the investing opportunities emerging for cleaning up the ocean.

A ‘Chicken-and-Egg’ Problem

The waste-per-capita ratio in Latin America is one of the highest in the world, and Kaplan says, expectations are that it will increase by at least 25% in the next 30 years. One reason is that more than 40 million people lack access to basic waste collection.

Cleaning up that waste, however, is a “chicken-and-egg problem,” because the waste needs to be collected before it can be recycled, but “why would you collect it if no one’s going to recycle it?” Kaplan says.

Policy developments in Chile and Colombia, however, have begun to create economic opportunities for local recyclers to start up and scale up, he says. Governments in Brazil and Mexico are beginning to consider similar actions. “That is creating a level playing field for these companies to grow much more rapidly,” Kaplan says.

These developments are similar to what Circulate Capital has seen in India, where it has invested in companies such as Mumbai-based Lucro Plastecycle, which recycles flexible plastics into new materials, and Srichakra Polyplast, in Hyderabad, India, which converts old plastic bottles into food-grade quality resins for new plastic bottles.

An Ocean Portfolio

Builders Vision has made 45 investments so far to support oceans, about half with fund managers and accelerators (which fund new entrepreneurs), and another half in direct investments, Lindsay says.

In addition to plastics, Builders invests in aquaculture through, for example, the Yield Lab, an accelerator for entrepreneurs developing sustainable agriculture systems. It also invests in “monitoring, reporting, and verification” technologies that evaluate efforts such as planting mangroves or seagrass to improve the ocean’s ability to absorb carbon, in addition to technologies that filter microplastics and integrate the material into manufacturing processes.

Most of Builders’ ocean investments are in Europe, where there are more ocean-oriented venture funds. That’s because of a European Union initiative to invest in start-up vehicles so they reach a viable size, Lindsay says. Builders’ goal, however, is to invest more with firms such as Circulate Capital that are based closer to the problems they are trying to solve.

“Navigating country risk without having a sense of the landscape is incredibly challenging,” he says. “You’re going to end up deploying some capital pretty poorly.”

Spurring Economic Development

For Circulate Capital, investing in and growing companies that can rethink supply chains for recycling—“from collecting and sorting to processing and manufacturing”—has ancillary benefits.

Not only do these companies contribute to the fight against climate change, they also create jobs and help local economies.

“Across Latin America and the Caribbean there are millions and millions of people whose livelihoods depend on collecting and trading plastic waste,” Kaplan says. “As we develop the supply chains, and help them scale, that creates more economic opportunity for those vulnerable populations—if it’s done in a responsible way, which is a big part of how we invest.”

In Kaplan’s view, the problem of plastic waste and ocean health will only be solved when “we stop thinking about it just as an environmental issue and start thinking about it as an economic development opportunity.”

Companies such as Lucro and Srichakra are beginning to scale, but Kaplan says the plastics problem in South Asia and Southeast Asia alone will still require “many, many billions” of dollars of investment to solve. Part of Circulate Capital’s role is to catalyse capital by proving these investments can work.

The firm’s second ocean fund, for instance, brought in development finance institutions such as the World Bank Group’s International Finance Corp. and the European Investment Bank in addition to family offices and private investors.

“We’re seeing more investors getting interested in the space. We’re seeing these companies successfully hit their targets and their milestones,” Kaplan says. “Those are all positive directions. But there’s still a lot more work to be done before we can say we’re moving the needle.”



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AACCI’s Strategic Vision for Enhancing Australia-Arab Trade Relations

The Australian Arab Chamber of Commerce & Industry (AACCI) is fostering robust trade relations between Australia and Arab countries.

Mon, May 20, 2024 5 min

In an era where global trade and international relationships are more crucial than ever, the Australia Arab Chamber of Commerce & Industry (AACCI) serves as a bridge, for cooperation and growth between Australia and the Arab nations. Led by its Chairman, Mr. Mohamed Hage, the AACCI has taken on projects aimed at strengthening relationships and fostering development across borders.

This exclusive interview explores the initiatives implemented by the AACCI to expand its presence and influence in the region including the significant establishment of a new operational hub in Dubai. We also delve into how the Chamber embraces education through training and research, its participation in major international exhibitions, and its active support for both large corporations and small businesses.

Looking towards tomorrow, Mr. Mohamed shares his vision for broadening AACCI’s reach emphasizing the importance of the on-ground operations and cultural understanding in building business connections.

-Could you elaborate on the Australia Arab Chamber of Commerce & Industry, including its objectives and main areas of focus?

The Australia Arab Chamber of Commerce & Industry (AACCI) plays a fundamental role, in promoting business partnerships and trade between Australia and the 22 Arab countries. As a member of the Union of Arab Chambers affiliated with the Arab League, AACCI focuses on strengthening trade and investment ties, across these countries.

To nurture these connections effectively AACCI has outlined four objectives: facilitating trade and investment activities, certifying documents, educating stakeholders, and offering marketing assistance.

Our initiatives are designed not only to empower trade and investment endeavors but to also ensure engagement with specific sectors that drive these activities. With an understanding of the characteristics, strengths and preferences of each country, AACCI prides itself on its specialized knowledge customized to suit the distinct business environments of these nations.

– As the AACCI approaches its 50th anniversary, what have been some of the key milestones and achievements?

I believe one of AACCI’s accomplishments is the opportunities it has opened up for numerous Australian companies to access markets, in the region. Moreover, the strong bilateral trade relationship that has developed between Australia and the 22 Arab nations over the five decades has led to trade transactions amounting to billions of dollars.

This extensive trade covers industries such as food and beverages, luxury hotels and many more services. Each successive generation, within AACCI has built upon the foundation laid by its predecessors enriching their knowledge base and expanding their range of services.

– How does the AACCI leverage its diverse leadership team to enhance trade and investment opportunities between Australia and the Arab region?

Since taking on the role of chairman, my main focus has been on expanding our presence in the region. This led to the idea of opening an office in Dubai, which symbolizes our dedication to deepening our engagement in that area. We have successfully secured the license to open our first office in Dubai after 50 years, which will serve as a gateway to the GCC and North Africa.

I strongly believe that building two-way trade and investment ties requires more than a degree of business connectivity; it demands having local representatives present in each region. With trends emphasizing strategies the value of face-to-face engagements cannot be overstated.

Setting up offices in the region is essential for the Chamber to truly serve as a link and support system for business activities. Ultimately this expansion will bring benefits to our members and partners by providing them with access, to dynamic markets and diverse prospects.

– Can you discuss the significance of AACCI’s role in cultural and business exchanges between the two regions?

The importance of understanding cultures in our operations cannot be overstated. To address this, we have included a training platform within the Chamber to strengthen our cultural awareness initiatives. This new program offers our members access to modules on our website focusing on global business practices.

Furthermore, we have set up a Center of Excellence specifically dedicated to researching areas like food security and cultural awareness. These research endeavors are essential for promoting knowledge between the two regions.

By combining the resources of the Center of Excellence, our training resources, and the forthcoming local office in Dubai, we’re providing cultural awareness not only in the region but also in Australia. This approach ensures that our members are well equipped and knowledgeable boosting their effectiveness and involvement, in markets.

– What is the objective of your on-ground presence at conferences and events?

Participating in conferences and on ground events is very important for increasing awareness in industries like construction where knowledge of opportunities in the Arab world may not be widespread. When we see projects such as NEOM or notice the construction boom happening in the region it becomes important for organizations like the Chamber of Commerce to highlight these prospects. By taking part in large scale expos such as the Sydney Build Expo we position ourselves at the forefront of these advancements.

Our presence at these events enables interaction giving entrepreneurs a chance to visit our booth engage in discussions and learn more about the region in an approachable and personalized manner. This plays a role in simplifying the process and making opportunities concrete.

– With such a diverse membership base, how does AACCI tailor its services to meet the needs of both large corporations and small startups?

When it comes to discussing business it’s important to grasp how influence and vision come into play. Businesses looking to expand are often motivated by a desire to achieve something whether they are big companies or small enterprises. Small businesses typically aim to raise their brands profile while larger corporations seek recognition and market dominance.

Standing out in this area can be tough mainly because the key driving force is the passion to showcase the brand and products on a platform. This determination serves as a motivator for entrepreneurs.

At the Chamber we make a point of recognizing the needs of both big and small players by understanding each members individual situation. We ensure that every member is well informed about the opportunities and risks that come with expanding. For small businesses, this means being aware of the financial demands, while large businesses are advised on the necessity of both financial and emotional resilience.

– How does AACCI plan to expand or evolve its services in the coming years to further support its members?

The importance of having resources on the ground cannot be emphasized enough. Having local staff is key to establishing connections with the communities we serve. Without a presence in the area staying updated on events and activities becomes quite challenging.

This is why, as I’ve mentioned before, we have established an office in Dubai, staffed with personnel dedicated to supporting our members. This local office will help us effectively bridge the gap between Australia and the Arab world. And our members will benefit from insights and assistance from someone who truly knows the landscape.

In Australia we have equipped offices throughout the country staffed by individuals who play a significant role in our operations. This strong domestic network complements our efforts ensuring that we provide support to our members both locally and globally. This strategic approach is crucial, for nurturing business relationships and fostering continental understanding.

 

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