(Reuters) French water and waste group Veolia Environnement has bought a majority stake in Dutch plastics recycling company AKG Kunststof as part of a strategy to grow in waste recycling.
Veolia declined to say how much it paid for AKG, bought from private equity firm Wadinko, but Chief Executive Antoine Frerot told Reuters on Thursday it was less than AKG’s 34 million euros ($38 million) revenue in 2014.
Wadinko will keep a small stake and a seat on AKG’s board.
Frerot said that while the investment in AKG is relatively small for Veolia, which has a market capitalisation of more than 12 billion euros, AKG’s recycling technologies have huge potential for wider application.
AKG recycles polypropylene plastics from industrial and household waste, from which it makes polypropylene granulates that it sells to manufacturers of plastic products.
Strong and heat-resistant, polypropylene is one of the most commonly used plastics in everything from the lids of Tic Tac mint boxes to microwave-resistant food containers.
The recycled plastic, which has the same qualities as new plastic produced by the petrochemical industry, is used for flower pots and garden products, and in the automotive, infrastructure and white goods industries.
Frerot said AKG also has an innovative technology to recover different kinds of plastic from household waste, by floating ground-up plastic waste in water and separating it by density with a proprietary technology partly based on magnetism.
Frerot said plastics recycling is difficult and that at the moment only plastic water bottles made from polyethylene are easily recyclable. The rest is mostly incinerated or buried in landfill.
“The AKG plastics sorting technology is simple and cheap,” Frerot said, adding that Veolia plans to roll it out in other countries. It will build sorting facilities in cities where it can source a steady stream of plastics waste, and find buyers for the recycled material.
Veolia, which collects some 370,000 tonnes of plastic waste per year, will boost the capacity of AKG’s plant at the Dutch town of Vroomshoop to 75,000 tonnes per year from 34,000 tonnes. Frerot said a new plant with a 75,000 tonne capacity would represent an investment of 15 to 20 million euros.
He said Veolia will continue to focus on organic or self-generated growth, but is ready to make more similar acquisitions that can boost its recycling technologies.