Survey finds surge in circular economy investment

In its Investment into the UK Circular Economy report, BDO said the value of these deals – totalling 184 transactions – increased to £1.3bn of disclosed investments, compared with £879m in 2022.

Taking an average of these, BDO estimated that total disclosed and undisclosed investment in the sector exceeded £2bn last year, and £3.5bn over the last five years.

“We continue to see circular economy deals out-pace the rest of the UK mergers and acquisitions market,” said Rory McPherson, BDO deal advisory partner.

“As well as exceptional deal value and volume, we’re seeing many high-quality transactions with innovative businesses right across the UK being backed to support their scale-up journey.

This year’s Circularity Gap Report, published by the Circular Economy Foundation, found global discussion of the topic had tripled in the past three years, but the consumption of secondary materials had declined by a fifth in that time.

It urged governments to adjust fiscal policies and leverage public investment to ensure circular solutions can begin to replace linear models.

BDO said growth capital firm BGF has been the most active UK investor over a three-year period, with 15 transactions, while investment manager Foresight led in 2023 with five deals.

Venture capital accounted for 58% of the UK’s 2023 transactions, reported BDO, followed by mid-market private equity, which led on 21% of these.

Industrials & manufacturing was the most prominent sector for circular economy investment for the third year in a row, accounting for 34% of deal volumes. Technology, media & telecoms followed at 28% and then retail, consumer & leisure at 16%.

“We’re excited by the level of activity in the sector and its future potential as businesses continue to create value, reduce waste, and drive inefficiencies, as well as driving wider benefits for society and delivering against environment goals,” said McPherson.