PE deals in waste management sector decline as focus shifts to waste reduction

Private equity and venture capital investments in waste management are on track to decline further in 2024 as investors shift their focus to innovations supporting circular economy from the traditional waste management services.

In the year to Sept. 15, global private equity and venture capital-backed deals totaled $247.2 million, just 7% of the $3.62 billion recorded in all of 2023, according to S&P Global Market Intelligence data.

The aggregate deal value in the sector has been declining since its peak of $8.87 billion in 2021.

The number of deals also fell to 25 in 2024 year-to-date, from 76 in 2023 and 99 in 2022.

Total deal value from July 1 to Sept. 15 was $8.3 million, compared with $2.42 billion recorded in the third quarter of 2023. The number of deals fell to six from 22 in the July-September 2023 period.

The data includes whole company and minority stake acquisitions, asset deals and rounds of funding of sanitary services, sewage treatment systems and waste water treatment. Sanitary services cover cesspool and septic tank cleaning, hazardous waste collection, treatment and disposal services, recycling facilities, refuse systems, remediation services, sewer cleaning and rodding as well as solid waste collection, treatment and disposal services.

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The decline in private equity investments in waste management may be attributed to the shift in investors' focus away from historical waste management solutions such as landfills, waste collection and other end-of-life disposal services and into solutions focused on reducing and recycling waste, said Tazia Smith, chief operating officer and head of capital partnerships at Closed Loop Partners LLC.

"Evolving regulations, corporate climate goals, shareholder demands, and a focus on more responsible and cost-effective input and output management drive capital to solutions contributing to a circular economy—one that is based on materials innovation, recovery and remanufacturing," Smith said in a written response.

The circular economy model seeks to prolong the life cycle of products by reusing, repairing, refurbishing, renting and recycling existing materials and products, according to the European Parliament.

"We at Closed Loop Partners have seen meaningful capital inflows into the transition away from linear, take-make-waste businesses to circular businesses, with a notable uptick in the last five years," Smith said.

Biggest deals

In the biggest transaction so far in 2024, Germany-based battery recycling company Cylib GmbH raised €55 million in a series A funding round co-led by WF World Fund Management GmbH and Porsche Ventures GmbH.

The second-biggest transaction was the $45 million growth equity round of bulk waste removal company CheckSammy Technologies Inc. I Squared Capital Advisors LLC led the round, while Zero Infinity Partners LLC participated.

Eleven deals were announced in the US and Canada, while Europe and Asia-Pacific saw seven deals each.

In terms of deal value, the US and Canada secured $116 million in announced investments, while Europe raised $104.5 million. Waste management companies in Asia-Pacific obtained $26.7 million in private equity-backed deals.