UK circular economy investment hits £2.2bn in 2024

UK circular economy businesses attracted £2.2bn in disclosed funding during 2024, representing a 64 per cent increase from 2023's £1.3bn total despite transaction volumes remaining broadly flat at 183 deals.

The surge in deal values demonstrates a maturing market with larger capital injections per transaction, according to new research from accountancy and business advisory firm BDO.

It estimates the total investment in UK circular economy businesses could have reached £3.2bn in 2024, up from £2bn in 2023, based on average disclosed investment patterns. The seventh edition of the research defines circular economy businesses as those promoting waste reduction, improving resource use efficiency and extending product lifecycles.

Venture capital and private equity investors continued to dominate activity, accounting for 78 per cent of all transactions in 2024 – comprising 58 per cent venture capital and 19 per cent private equity deals. This investor appetite reflects the sector's focus on efficiency principles and supportive government regulation incentivising green economy transitions.

BDO tracked seven transactions with disclosed values exceeding £100m in 2024, compared to three such deals in 2023. The largest single transaction involved waste management specialist Renewi, which attracted a £701m investment from Macquarie Capital.

Deal value growth was driven by increased activity in industrials and manufacturing alongside technology, media and telecoms sectors. These sectors offset declining activity in food and drink and retail and consumer categories, which reflected broader macroeconomic challenges.

Todd Mills, director in BDO's Deal Advisory team and circular economy specialist, said: "The UK's circular economy is one of the most advanced in the world, with a cohort of innovative businesses able to attract growth capital from a sophisticated investment community. We've been tracking the sector for seven years now and, though 2024 was the first year in which the number of transactions remained flat, deal flow accelerated in the second half of the year, with investors encouraged by greater political certainty."

Mills added: "The rise in overall deal value, meanwhile, is evidence of a maturing market. Investors are increasingly comfortable committing large amounts of capital to support the growth of circular economy businesses in a diverse range of industries and areas."

Significant deals continue into 2025

Among notable circular economy transactions in early 2025 is recycling group CIRQLR, backed by iCON Infrastructure LLP, which completed its eighth acquisition in two years with the purchase of Surrey-based Chambers Waste Management in March. The group now handles 600,000 tonnes of recycling materials annually across 19 facilities with a £150m turnover.

BDO advised CIRQLR on its acquisition strategy, which has created an integrated network spanning eastern England from the South Coast to the Humber. The business was established by industry veteran David Palmer-Jones OBE, former CEO of SUEZ UK, with backing from funds advised by iCON Infrastructure LLP.

Claire Frangou, Deal Advisory partner at BDO, said: "The overall M&A market has had a subdued start to 2025, with deal flow affected by geopolitical uncertainty in certain markets around the world. Investors are now hoping things will settle down and that M&A activity accelerates in the rest of the year."

Frangou added: "Though the outlook is cautious given the external environment that businesses and investors are operating in, we expect the UK's circular economy to be resilient. There's been some negativity towards companies with sustainability at the heart of their business models elsewhere in the world, but we aren't detecting that attitude shift here in the UK. We therefore expect investors to continue to be attracted to the strong fundamentals that underpin circular economy businesses."

The research shows sustained growth since BDO began monitoring the sector in 2018, when it tracked 43 transactions with £210m of publicly disclosed funding. The consistent upward trajectory reflects growing recognition among investors that circular economy principles can deliver both environmental and economic benefits.