Circulate Capital raises $220M first close for Asia recycling fund amid global ESG headwinds
What's the deal? Singapore-based Circulate Capital has reached $220 million at the first close of its second Asia fund, Circulate Capital Asia Fund II, exceeding its initial target and bringing the firm's total assets under management to $480 million.
The fund is targeting a final close of $300 million by end of 2026. Returning investors include The Coca-Cola CompanyDealroom has a profile for this one. Try Dealroom →, DanoneDealroom has a profile for this one. Try Dealroom →, DowDealroom has a profile for this one. Try Dealroom →, Procter & GambleDealroom has a profile for this one. Try Dealroom →, British International Investment, ProparcoDealroom has a profile for this one. Try Dealroom →, the International Finance Corporation, and family office Builders VisionDealroom has a profile for this one. Try Dealroom → — the investment vehicle of WalmartDealroom has a profile for this one. Try Dealroom → founder Sam Walton's grandson. New investors include the Emerging Markets Climate Action Fund, co-managed by Allianz Global InvestorsDealroom has a profile for this one. Try Dealroom → and the European Investment Bank, Dutch pension fund Achmea Investment ManagementDealroom has a profile for this one. Try Dealroom →, and SIFEMDealroom has a profile for this one. Try Dealroom →.
Founded in 2018 by Rob KaplanDealroom has a profile for this one. Try Dealroom →, Circulate Capital invests in recycling infrastructure and circular supply chain companies across South and Southeast Asia, with a focus on plastics, packaging, electronics, and apparel. Key markets include India, Indonesia, Thailand, Vietnam, the Philippines, and Malaysia. The first fund raised $188 million and has since added nearly 900,000 tonnes of annual collection and recycling capacity across the region.
Why now? Circular supply chains have moved from a niche sustainability theme to a strategic priority, driven by tightening regulation, supply chain disruptions, and corporate commitments to reduce plastic use.
The global economy consumes more than 100 billion tonnes of raw materials annually, yet only 7.2% is recirculated. Plastics alone represent an estimated $100 billion investment opportunity in collection and recycling infrastructure by 2030.
The strong first close is also notable for coming during a period of significant ESG fund outflows — Morningstar reported $84 billion in net outflows from sustainable funds in 2025 — making the result a meaningful signal of investor conviction.
What could go wrong? Recycling infrastructure in emerging markets is capital-intensive, operationally complex, and heavily dependent on informal collection networks that are difficult to scale reliably. Returns depend partly on commodity prices for recycled materials, which can be volatile.
The fund's reported target of around 20% net internal rate of return is ambitious for an impact-oriented strategy, and the gap between impact metrics and financial performance can widen as funds scale.
The signal: Circulate Capital's raise reflects a maturing thesis that recycling and circular supply chains are not just an ESG obligation but a commercial opportunity driven by regulation and material scarcity. European institutional capital — development finance institutions, pension funds, and corporate LPs — is increasingly anchoring these funds, signalling that circularity is becoming a standard allocation category rather than a niche impact bet.
As brands face mounting regulatory pressure to use recycled content, the infrastructure to supply it is becoming a critical — and investable — chokepoint in global supply chains.
Sources:
Circulate Capital
The Edge
moneycontrol
ImpactAlpha
Bloomberg
DealStreetAsia
Rob Kaplan's LinkedIn post
Image credit:
Circulate Capital
J.V.
