More than 80 percent of the recycling businesses in the United Kingdom feel that the country will fail to meet its EU recycling targets if the sector doesn’t receive additional external investment, according to a survey commissioned by the Waste & Resources Action Programme.
The survey, which interviewed a range of UK recycling companies, also revealed that more than 40 percent of the UK recycling companies interviewed are being held back by a shortage of available capital.
A quarter of the businesses were open to an approach from potential equity investors, although only 8 percent of businesses currently had an equity investor on board. In fact, less than half had presented a business plan in order to raise investment finance.
“The industry views on targets are supported by our research which estimates that the UK recycling sector requires £6 billion investment in reprocessing capacity alone if the UK is to meet EU recycling directives,” says WRAP’s Business and Finance programme manager Bevis Watts.
Attracting commercial investment is essential to grow the sector and a help to many businesses. For those restricted by a shortage of capital, WRAP has developed two financing programs, the recycling fund and the eQuip leasing program.
“Overall, only an average of 16 percent of recycling businesses were using lease finance to finance capital and working capital – a surprisingly low figure in a very asset intensive industry,” comments WRAP’s investment manager Tara Clair. “Some sources have reported the average UK SME sources 27 percent of its capital requirements from asset based finance