Closed Loop Partners launches Circular Services business

New York-based Closed Loop Partners and U.K.-based Brookfield Renewable have established Circular Services as a developer of circular economy and recycling infrastructure in the United States. Circular Services is majority owned and managed by Closed Loop Partners, and Brookfield is committing up to $700 million toward the growth of Circular Services through its Brookfield Global Transition Fund.

“[Circular Services] is a new business that is majority owned and operated by Closed Loop Partners,” says Jessica Long, chief strategy officer at Closed Loop Partners.

Long says Closed Loop has three primary business focuses—innovate, invest and operate.

She says, “We have our innovation center—the Center for the Circular Economy. From an investment perspective, we have an asset management firm that does venture growth, buyout and catalytic private capital. And then we now have an operating group called Circular Services.”

According to Closed Loop Partners, Brookfield has invested an initial $200 million in Circular Services, with an additional $500 million committed to pursue growth opportunities. Long says the initial $200 million will be used to help set up Circular Services operations, while the remaining $500 million will provide growth capital to expand the business across the eastern and southern United States.

Natalie Adomait, managing partner and chief investment officer at Brookfield Global Transition Fund, adds that Brookfield Global Transition Fund is focused on providing long-term infrastructure development to emerging business models that help to lower carbon emissions while also generating strong risk adjusted returns.

Closed Loop Partners says the Partnership Fund for New York City also is an investor in Circular Services, but it did not disclose how much it plans to invest in the division.

The Circular Services business will include operations of some of Closed Loop Partners’ acquired recycling businesses, including Sims Municipal Recycling, Balcones Resources, Single Stream Recyclers, Retrievr, HomeBiogas and several small modular material recovery facilities (MRFs). Closed Loop Partners says Circular Services operates a total of 12 facilities, with locations in New York, New Jersey, Pennsylvania, Arkansas, Florida, Texas and Arizona. The business also has several long-term municipal and commercial contracts to recycle and reuse paper, metal, glass, plastic, organics, textiles and electronics. The business processes over 1 million tons a year of materials across the 12 facilities.

With 12 facilities and several municipal and commercial recycling contracts, Long says the business “will be the largest privately held recycling company in North America.”  

Although all of these locations and services fall under the new Circular Services umbrella, Long adds that Closed Loop Partners doesn’t plan to change branding at respective locations at this time.

“They still have such great brand names and such a great reputation that keeping their names their names right now,” she says. “They’re all part of Circular Services. Circular Services is the overall operating company, the parent company, with all of these entities as part of its company. We might look probably in the next year for opportunities to rebrand or opportunities to bring identities together, being very mindful of the fact that again, they just happen to be businesses that have amazing reputations.”

She says Closed Loop Partners plans to hire leadership positions to oversee Circular Services; however, she adds that the company intends to keep the same leadership in place at individual MRFs and recycling facilities.

“We will want to bring in new talent and leadership to help us grow, but overall, it’s about keeping the people that are doing an amazing job with us,” she says. “A huge benefit we have is the leadership team and operations team for all of those entities. We’ve been working with Tom Outerbridge [of Sims Municipal Recycling], Adam Vehik [of Balcones Resources] and others who have been running these facilities for years and decades. They’re continuing on board to be leadership. I think they are phenomenal leaders. It’s hard to find really good people that really understand this business and know how to operate it.”

Closed Loop Partners’ new business aims to focus on a few different growth opportunities. First, Long says the company wants to use this business division to grow within cities it is already serving by scaling up processing abilities. Second, she says the company wants to expand by finding ways to recycle materials that don’t have as many recycling outlets, such as textiles, organics and electronics.

“I think those sectors are not nearly as mature as packaging,” she says. “So, growth opportunities are there to get those sectors to where they need to be.”

Third, Long says Circular Services wants to focus on expanding its offerings into underserved communities to boost recycling rates across the U.S. She says the company may consider how to add more localized, modular MRFs as a solution in underserved communities. She adds that modular MRFs “are much more affordable, and much easier to set up” than traditional MRFs.

Ron Gonen, founder and CEO of Closed Loop Partners, notes that the U.S. has been operating with “a very linear system” for waste management. He says, “Circular Services is building circular economy infrastructure that will serve the financial and environmental interests of cities, consumers, businesses. We are excited to transition to the circular economy, an economic system that invests in the continual use of commodities, reducing the reliance on natural resource extraction and landfills.”

Long adds, “Our goal is definitely to grow via Circular Services. … We want to be in a position where the models that we build here, being able to prove out the economics, be able to prove that recycling actually works, is something that has a ripple effect across the country and benefits everybody.”