A report from accountancy firm BDO has found that more than £1.5 billion of capital has been made into UK circular economy investments in the past four years.
In 2021, 119 investments were made in UK circular economy businesses compared to 72 in 2020.
But this year, BDO found that the first half of 2022 saw 80 investments and £500 million of capital deployed already.
Funding in 2021 came from venture capital (50%), mid-market private equity (22%) and debt funding making up 15% of deals.
The Investment into the UK Circular Economy report found that 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. Circularity Capital has established itself as the leading specialist circular economy investor with six investments over the same period.
In the research, BDO also found that 33% of the circular economy deals have been found in manufacturing and industrials, one third in food and drink, and 22% have been in retails, leisure and consumer markets.
BDO corporate finance partner Rory McPherson said: “The macro market trends have been favourable for dealmaking in the circular economy as environmental, societal, political and consumer trends have all raised awareness of the issues that many Circular Economy businesses are working to solve whether that’s material recovery, circular inputs, smart buildings or circular design.
“With ESG (environmental, social and governance) 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.”
