Origo Partners has made an investment of up to USD6.65m for a 20 per cent equity stake in Jinan Eco-Energy Technology, a Chinese provider and operator of recycling systems for waste plastic and scrap-tyres.
This investment represents the third in a series of shortlisted investment opportunities for which Origo raised USD30m through a placing completed on 11 June 2010.
Eco-Energy designs, develops, markets and operates recycling systems which convert scrap tyres and plastics into fuel oils and other value-added by-products. The company benefits from technologies that are either protected by international patents or have patents pending. Eco-Energy’s systems are provided as turn-key solutions to third party project developers or operated in joint ventures with selected local partners.
Eco-Energy’s technology is already deployed in a commercial scale recycling plant in Taiwan with a processing capacity of 20,000 tonnes of scrap tyres per annum, and the company has orders from customers in Europe, South East Asia, and China for the delivery in 2010/11 of recycling systems with an aggregate annual processing capacity of 90,000 tonnes of tyre and plastic residue.
In addition, Eco-Energy is co-developing two plants with joint venture partners in China and Germany with an initial aggregate annual production capacity of 30,000 tonnes per annum.
Under the terms of the transaction, Origo will subscribe to USD3m of redeemable preferred stock for an equity stake of 10.5 per cent and maintain an option to invest an additional USD3.65m for a fully-diluted equity interest of 20 per cent in the business.
The proceeds of the fundraising will be dedicated to sales and marketing, general corporate purposes and for funding Eco-Energy’s capital contribution to the development of its German joint venture.
Origo’s investment in Eco-Energy will be held through Achieve Stars Development, a special purpose holding vehicle.
Chris Rynning, chief executive of Origo, says: “Dealing with growing landfills of waste plastic and scrap tyres is a growing problem in China and across the globe. We believe Eco-Energy’s recycling systems provide a compelling alternative to non-value added methods of disposal, especially in mature markets with well-established environmental regulatory regimes.”
