Photo by Jonathan Chng on Unsplash
Delta Capital Myanmar (“Delta Capital”) announced today that the fund managed by Delta Capital Myanmar – Myanmar Opportunities Fund II (“MOF II”), together with Daiwa PI Partners (“Daiwa”) through Daiwa Myanmar Growth Fund, have made an investment of USD 12.6 million into Commercial Plastics Company (“CPC” or “the company”), a plastic bottles recycler.
The investment will enable CPC to expand its offerings and increase its recycling capacity with state-of-the art equipment. The company will become the first food-grade bottle-to-bottle recycler in Myanmar with high operating standards, capable of producing US Food and Drugs Administration and EU Food Safety Authority compliant food-grade recycled Polyethylene Terephthalate (“PET”), and supply both domestic and overseas PET bottle converters and beverage manufacturers.
Delta Capital has accumulated industry knowledge and familiarity with CPC’s management through its related investments. This investment marks the first control deal for Delta Capital and highlights its commitment towards sustainability.
The investment is Daiwa’s first investment out of its newly established Daiwa Myanmar Growth Fund. Daiwa aims to contribute to both the increase in corporate value and vitalization of Myanmar’s economy through the investment.
The production and disposal of plastics put an enormous burden on the environment. It is estimated that, if the current consumption pattern continues, by 2050 there will be more plastic than fish in the oceans, and that plastic will account for 20% of oil consumption and for 15% of CO2 emissions. This challenge has put plastic recycling very high on the agenda of many organizations across the globe.
The global annual plastics production reached 360 million metric tons in 2018, a twenty-fold increase in the past half-century, and is expected to double again in the next 20 years. In light of the growing environmental concerns, both private and public sectors are calling for increased recycling. Regulators are imposing mandatory recycled content requirements while major brand owners are committing to use more recycled contents in their packaging.
Myanmar’s population of 54 million is estimated to consume approximately 2 billion PET bottles per year, equivalent to 40,000 metric tons. PET consumption per capita is still relatively low compared to regional countries and it is poised to grow at 10-15% per year on the back of rising disposable income. Myanmar is estimated to have a PET bottle collection rate of 64%, compared to an average of 26% in Southeast Asia, leading to more favorable opportunities for recycling in Myanmar.
CPC’s recycled PET will serve as a viable alternative to imported virgin PET, reducing Myanmar’s reliance on imports. Post-expansion, the company will collect and recycle over 20% of the PET bottles produced in Myanmar and save over 15,000 metric tons of CO2 emission per year. Through collaboration with various stakeholders including the sustainability committed multinational companies, CPC aims to build a sustainable PET supply chain and improve the operating, environmental and social standards of its suppliers.
Nick Powell, Managing Partner of Delta Capital Myanmar, said: “This is an investment that is very close to our hearts. We’re excited to be part of this business that will place Myanmar at the forefront of the global move towards full circle plastics recycling that will have long lasting social and environmental impact.”
Kenichi Shimomoto, Senior Managing Director of Daiwa PI Partners, said: “We believe that CPC will keep leading position by utilizing state-of-the-art technology and contribute not only to develop Myanmar economy but also to provide solution for environmental issues. We are very excited and proud that we can take part in this remarkable project with the CPC team and our fellow investor, Delta Capital Myanmar.”
Steven Granot, Chairman of Commercial Plastics Company, said: “We are pleased to be joined by two strong financial partners in Delta Capital and Daiwa as we embark on this transformational expansion. With this additional investment, CPC will cement its leadership role in the Myanmar recycling market, push us higher up the value chain into food grade recycled PET and help address this critical environmental issue.”
About Delta Capital Myanmar
Delta Capital Myanmar is Myanmar’s largest and most active asset manager with an asset under management of over USD 120 million. It provides growth capital to leading entrepreneurs and businesses active across key growth sectors of Myanmar’s frontier economy. Since 2013, Delta Capital has made nine investments across Myanmar Opportunities Fund I and Myanmar Opportunities Fund II.
About Daiwa PI Partners
Daiwa PI Partners Co. Ltd. is a wholly consolidated subsidiary of Daiwa Securities Group Inc., and conducts investments across South East Asia and Greater China, with a strong focus on Myanmar. It provides growth equity to firms with established business model and visibility to profitability across a broad range of sectors. Since 2017, Daiwa has made six investments in Myanmar through its principle investment.
About Commercial Plastics Company
Commercial Plastics Company was incorporated in 2017 and operates a PET recycling facility in Hlaing Thar Yar industrial zone in Yangon. The company collects, sorts, washes and grinds used PET bottles into PET flakes for export to Europe.
Photo by Jonathan Chng on Unsplash