Closed Loop’s push to link MRFs, organics and more

Last year’s launch of Circular Services created a new family of varied recycling companies, yet they’re all focused on a circular economy and are fueled with hundreds of millions of dollars in fresh capital. 

When New York-based Closed Loop Partners in November announced the creation of Circular Services, the firm called the venture “the largest privately held recycling company in North America.” 

Recently, Jessica Long, chief strategy officer and managing director at Closed Loop Partners, provided more details to Resource Recycling about what the transaction entailed. 

A dozen processing sites

A for-profit company, Closed Loop Partners provides funding to support recycling in a number of ways, offering loans, purchasing ownership stakes in companies and funding research projects. 

Long said Circular Services will serve as Closed Loop Partners’ recycling infrastructure and operations business, combining companies that have a dozen processing facilities across the U.S. The Circular Services companies are the following: 

• Balcones Resources, which operates MRFs in the southwest and southeastern U.S. Balcones Resources acquired Single Stream Recyclers of Sarasota, Fla. in 2020. With MRFs across the southern U.S., Balcones has facilities in Texas cities of Austin, Dallas and Taylor; Little Rock, Ark.; and Sarasota, Fla. 
• Closed Loop Organics, which includes HomeBiogas U.S., a company that creates anaerobic digester (AD) units that convert organic materials into energy and fertilizer. Their modular AD systems are already in operation across the U.S., with larger-scale systems in development in Florida, New Jersey, New York, Texas and Wisconsin.
• Localized Modular MRF, a modular MRF company that currently has a facility in Cumberland County, N.J. and plans to scale across the East Coast and southern U.S.
• Retrievr, which runs doorstep electronics scrap and textiles collections and has operations in Denver and Philadelphia.
• Sims Municipal Recycling (SMR), which operates a MRF and glass processing plant in Jersey City, N.J., and a large MRF in Brooklyn, N.Y. SMR also has operations in Palm Beach County, Fla. and Lee County, Fla.

Those companies together have a number of long-term municipal and commercial recycling contracts, including Balcones’ recently won contracts in San Antonio and Phoenix. Those contracts will have Balcones building a large MRF to serve San Antonio and taking over operation of two city-owned MRFs in Phoenix.

Before creating Circular Services, Closed Loop Partners had either 100% or majority stakes in each of these companies. Circular Services bought 100% of the individual companies through a combination of cash and shares in Circular Services. 

Post-transaction, Closed Loop Partners owns a majority of Circular Services, which is managed by Closed Loop Partners. Circular Services owns 100% of each of the acquired companies.

In some cases, the former investors of the discrete companies now own minority shares of Circular Services. For example, last year, Australian metals recycling giant Sims Limited sold a majority of Sims Municipal Recycling to Closed Loop Partners and other investors. One of the other investors in Sims Municipal Recycling was investment group Partnership Fund for New York City. Now, Sims and Partnership Fund for New York City each own a minority stake in Circular Services, Long said.

Long explained that, for the time being, the companies under the Circular Services umbrella will retain their names and individual identities. 

“I think it’s important to keep that brand value,” she said, pointing to the name recognition of Sims Municipal Recycling and Balcones Resources, in particular. 

She said the sister companies under the Circular Services umbrella are already working together. One of Circular Services’ aims is to reduce greenhouse gas emissions from transportation. 

“Our goal is to keep things as local and as regional as possible, because then you start creating new remanufacturing hubs, new recommence hubs,” she said. 

Massive investment fueling growth

To acquire the businesses to bring under the Circular Services umbrella, Closed Loop Partners used funding from investment firm Brookfield Renewable. 

Brookfield, through its Brookfield Global Transition Fund (BGTF), invested $200 million in Circular Services, Long said. BGTF also committed to invest another $500 million in the future to pursue growth opportunities.

“We cannot create a net zero economy without significantly scaling the infrastructure required for a circular economy,” Natalie Adomait, managing partner and chief investment officer of BGTF, stated in a press release. “We look forward to working with Closed Loop Partners, clear leaders in the circular economy sector, to support Circular Services to scale up its impact across the United States.”

Long explained that the $200 million was used to acquire the companies, and it will be used to drive their growth. As an example of expansion to be funded with that money, she pointed to Balcones Resources’ planned MRF to serve San Antonio. 

In the future, the $500 million of growth capital from BGTF could be used in a number of ways, including expanding recycling capacity, offering new services, technology investments, education and acquisitions of additional companies, she said.