Singapore-based Circulate Capital has raised US$220 million in the first close of its second Asia-focused fund, a vote of confidence for circular economy investing at a time when much of the market’s attention and money has been swallowed by artificial intelligence (AI).
The new vehicle, Circulate Capital Asia II, has already reached more than 70 per cent of its US$300 million target, surpassing the firm’s first fund, which closed at US$188 million. The capital will be deployed into recycling and circular supply chain businesses across India, Indonesia, Thailand, Vietnam, the Philippines, and Malaysia, with a focus on plastics and packaging, as well as electronics and apparel.
Also Read: Circulate Capital makes final close of US$76M fund to advance circular economy for plastics
The investor line-up comprises strategic corporates, development finance institutions, pension-linked capital, and family offices. Returning backers include The Coca-Cola Company, Danone, Dow, Procter & Gamble, British International Investment, Proparco, IFC and Builders Vision, while new investors include EMCAF, Impact Fund Denmark, SIFEM and Australian Development Investments.
Why circular economy investing is growing
The broader investment case for circularity is getting harder to dismiss. Globally, companies are facing volatile raw material costs, supply chain disruptions, tighter environmental regulations, and rising pressure from customers and consumer brands to reduce waste. At the same time, the world still extracts more than 100 billion tonnes of raw materials each year while remaining only 7.2 per cent circular.
Asia is central to that story. The region combines rapid consumption growth with weak waste management systems and a manufacturing base that increasingly needs reliable, locally sourced recycled materials.
For investors, this creates a more direct commercial opportunity than the old sustainability pitch. Recycling, recovery, and reuse are no longer just about impact reports; they are about securing feedstock, reducing import dependence, and building more resilient supply chains.
Plastics remain the biggest entry point, but the market is widening. Investors are looking not only at mature recycling streams, such as PET, but also at harder-to-process materials, including polyolefins, flexible packaging, textiles, batteries and electronic waste.
Is AI crowding out circular economy funding?
In short, yes, but not completely.
AI is dominating global venture and growth funding, which makes life harder for circular-economy startups and infrastructure plays, especially in Asia, where many investors still prefer software-led models with faster scaling potential. Circularity businesses are usually more capital-intensive, more operationally messy and slower to mature. That is not exactly catnip for momentum-driven investors.
But the sector is not competing for the same pools of money. Much of Circulate Capital’s backing comes from corporates, development finance institutions, and impact-oriented investors with longer time horizons and strategic reasons to be in the market. For them, circular economy investing is less about chasing the next valuation spike and more about addressing supply chain risks, regulatory exposure, and material scarcity.
That distinction may help the sector keep growing even while AI hoovers up headlines.
Asia’s plastic problem is still severe
If anything, the region’s waste crisis remains underfinanced relative to its scale.
South and Southeast Asia generate vast volumes of plastic waste, while collection, sorting, and recycling systems often lag far behind demand. Low-value and flexible plastics remain especially difficult to recover at scale, and leakage into waterways and coastlines continues to be one of the region’s defining environmental failures.
Also Read: Circulate Capital joins bio-based plastic developer Algenesis’s US$5M seed round
Investors are paying more attention than they were a few years ago, but not enough to match the problem. Circulate Capital estimates that plastics alone represent a US$100 billion cumulative investment opportunity in collection and recycling infrastructure by 2030. That figure underlines the gap between what is needed and what has actually been deployed.
Where the market is heading
The next phase of circular economy investing in Asia is likely to move beyond straightforward bottle recycling into more complex areas: flexible plastics, alternative packaging, textile recovery, battery recycling, and the recovery of rare and critical materials from electronics.
That shift is important because the easiest opportunities have already been identified. The future will depend on whether investors can back businesses that not only process waste but also build dependable circular supply chains around it. The winners are likely to be firms that can supply recycled inputs to major manufacturers and consumer brands on an industrial scale.
Rob Kaplan, founder and CEO of Circulate Capital, said the firm’s track record shows the circular economy is “a sophisticated asset class that can deliver liquidity to private equity investors”.
Circulate Capital’s record so far
Circulate Capital said it has completed more circular economy deals in Asia than any other manager. However, it did not disclose the exact number of deals it has made since launch.
It did, however, point to exits as proof that the model can produce returns. Fund I has fully exited Indian digital waste management platform Recykal, and partially exited Lucro, a recycler focused on hard-to-manage flexible plastics, and Srichakra Polyplast, described as India’s first food-grade plastic recycler.
Since 2020, the firm says its Asia portfolio has added nearly 900,000 tonnes of annual collection and recycling capacity. Fund II aims to finance nearly two million tonnes more.
The bigger takeaway is that circular economy investing in Asia is no longer a fringe climate theme. It is slowly becoming an industrial and supply chain play. AI may still be the market’s favourite shiny object, but waste, unlike hype cycles, has a habit of sticking around.
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