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Exclusive: Apollo agrees to $300M loan for recycler Circulus

Illustration of a dollar sign formed by recycled plastic items.

Illustration: Gabriella Turrisi/Axios

Apollo Global Management agreed to lend $300 million to Circulus, one of the few U.S. companies recycling shrink-wrap and other plastics. Circulus is a portfolio company of Ara Partners.

Why it matters: Apollo, one of the world's largest private equity firms, is putting its weight behind a corner of the ESG market that is gaining more attention: recycling consumer waste.

What's happening: Apollo committed to provide up to $300 million in a senior, secured loan to Circulus.

  • Circulus, based in Houston, converts low-density polyethylene into resin pellets for plastic bags, shrink-film, and other wraps and containers. The company plans to double its recycling output.
  • It uses "mechanical recycling," a method that consumes less energy than traditional chemical-based recycling.

State of play: The U.S. is the world's biggest plastics polluter. And it's getting worse.

  • The pandemic, and the demand it drove for at-home shopping and shrink-wrapped everything, sparked a glut of plastics consumption. The glut has been exacerbated by China's ban on importing U.S. plastic waste.

What's next: Circulus runs two commercial factories. It plans to open a third in Q1 in Alabama, with another two in development.

  • "Every big consumer packaged goods company out there has made a net-zero commitment," Troy Thacker, a managing partner of Ara Partners, tells Axios. "We’ve got to build as many of these facilities as we can, as fast as we can, to satisfy the demand." Ara is a PE firm focused on decarbonization.

👀 What we're watching: Plastic bag bans are nothing new. But states such as California are upping the ante by issuing broader restrictions on other single-use plastics.

  • "There's an extreme shortage of recycled plastics for these markets," Corinne Still, a partner at Apollo says. "Those forces are really shaping the demand."

Editor's note: The story was updated to make clear that Apollo is providing the loan and that Circulus is an Ara Partners portfolio company.

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