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Private equity firms want to invest in scrap metal

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Metal recycling is an area that private equity companies are increasingly wanting to invest in, according to a leading consultant.

In recent months, First Reserve and KKR have both bought scrap metal operations. First Reserve is looking to buy Luxembourg based recycler Metallum, subject to European approval, while KKR Asset Management has invested in Australian recycling group CMA Corp.

Boston Consulting Group senior partner Martin Woertler told Reuters: “When this market really takes off, a lot of PE firms may follow First Reserve and KKR. Maybe some are in a holding position, monitoring the markets and waiting for the right time or a signal to get in deeper.

“Increased volatility and uncertainty in the metals markets after the crisis may still be keeping private equity away from the sector. But to me it’s obvious that metal recycling will increase in value and importance in the long term.”

One of the reasons for this, he says, is the reducing quantity of virgin materials, making the scrap metal sector likely to look even more attractive in the future. 

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