China-focused private equity player Origo Partners has invested up to $6.65m for a 20 per cent stake in Jinan Eco-Energy Technology, a provider and operator of recycling systems for waste plastic and scrap tyres.
Under the terms of the deal, Origo will subscribe to $3m of redeemable preferred stock for an equity share of 10.5 per cent and maintain an option to invest an addition $3.65m for a fully-diluted equity interest of 20 per cent in the business.
Eco-Energy, which deploys proprietary technologies, develops and operates systems that convert scrap tyres and plastics into fuel oils and other value-added products.
Origo said the investment represents a third in a series of shortlisted investment opportunities for which Origo raised $30m through a placing completed earlier this month.
Chris Rynning, CEO of Origo, said, “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.”
Origo said at the conservative end of its estimations, it predicts recycling plants based on Eco-Energy’s technologies will be processing more than 100,000 tonnes of scrap tyres and waste plastic each year by the end of 2011.
Eco-Energy has already secured orders from customers in Europe, South East Asia and China for the delivery later this year and next for recycling systems with an aggregate annual processing capacity of 90,000 tonnes of tyre and plastic residue.
Origo is listed on the London Stock Exchange’s AIM market.