Economic uncertainty is reshaping global investment trends—highlighting the strength of circular economy solutions and resilient waste management systems.
While the ongoing economic crisis continues to cloud companies’ future across the cleantech spectrum, the waste management industry’s situation is not all bad, as its client group increasingly looks to create new revenue streams.
According to Jesse Klinkhamer, CEO of Canadian specialist Klean Industries, the financial woes have introduced a new type of customer seeking waste management solutions.
He told NewNet that the company, which works with utilities, businesses, and government departments across North America and Europe, has seen an increase in independent project developers seeking to use its services and technologies.
‘Many independent project developers are coming to us, specifically now in these tough economic times, as people are looking to be more entrepreneurial and create projects where they have identified a possible profitable use for their feedstock.’
The increase in project developers wanting to source Klean’s technology has pushed the company to use its network to support fundraising initiatives for these clients. However, Klinkhamer admits that the global economic crisis does not make this an easy task.
‘We help our clients raise equity, but particularly with the instability of Europe and the general financial crisis, it is rather difficult to find the right equity partner.’
He said ‘the ideal partner’ refers to larger private equity firms that have already raised a series of funds and successfully capitalized on projects. Most of the firms Klean Industries works with have more than $1 billion under management, have already invested in the environmental sector, and have some experience investing in the oil, chemical, and energy space.
However, the main challenge is the investment size needed for each installation. The total capital required for one of these projects varies between $30m and $50m, and at least 30% to 40% of that is expected to be raised in the first round.
‘Raising small amounts of money is easy, but small amounts don’t get you anywhere; it just makes you go back sooner than later for more money, which causes more dilution.’
Klinkhamer believes that the public market situation for cleantech companies is not much more straightforward. As the company continues growing, Klean Industries has considered going public; however, its CEO admits that it has its reserves.
‘It is a tough marketplace and a very different animal than a decade ago, even more so, a completely different animal than in 2008 when oil reached $140 a barrel.’
He backs up his argument by saying that compared to approximately 160 IPOs in 2007 on the US markets, there were 21 in 2008 and less than half a dozen in 2011.
He said, ‘In the energy sector, raising the following amount you want as a public company has become difficult.’ Nevertheless, Klean Industries expects this scenario to change in the next 12 to 18 months, which may give some hope to cleantech companies wanting to test the public markets.
See the original article written by Daniela Jaramillo, which can be read in full at NewNet Article.
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