DEFINITE-CCRI identified relevant investors and financial instruments for its projects
The report, led by Bankers without Boundaries, a DEFINITE-CCRI partner, identified private and public investors along with philanthropic institutions most likely to fund circular economy projects selected by DEFINITE-CCRI. The document is based on conversations with financial institutions and reflects their views on circular projects’ bankability.
Relevant private investors include private banks, impact investors, green infrastructure funds and corporate investors. The investors’ relevance may vary depending on the project type. For example, private banks might be best positioned to fund DEFINITE-CCRI projects that have already built a minimum viable product or pilot. Their investment would most likely amount to €10 million or more. On the other hand, impact investors could be more willing to provide debt and equity to early-stage and smaller projects if they align with their impact objectives.
Public sector investors are not the primary target of DEFINITE-CCRI as the programme seeks to leverage private capital for market-based circular economy solutions. However, public funding can be crucial in developing early-stage and underinvested sectors, especially at the EU level. Therefore, the report mentions development banks and funds, national and regional governments, municipalities and local authorities as potential providers of debt solutions, technical assistance and grants. Philanthropic institutions could also benefit the programme’s participants by providing a portion of capital or collaborating with private investors on blended finance schemes.
The study finds that circular financing is most likely to be pursued by international and national public development banks, private banks and impact funds. Furthermore, the report lists relevant financing instruments, grouping them into debt and equity financing structures. Debt financing encompasses project finance, revolving credit facilities, impact-linked loans, and green and sustainable loans. Equity financing includes angel investor setup, pooled funds, equity-to-debt convertible option, and senior/preferred equity tranche.
In conclusion, the report identifies factors influencing investors’ decisions, such as project scalability, market potential, return on investment and risk mitigation. Although the report is tailored to the specifics of the DEFINITE-CCRI programme, it can provide valuable insights for any project developer seeking to attract investment in circular economy initiatives.
Read the full report here.