Perfect timing for a new player in the circular economy
Virtually all waste can be given a new life as raw material. Ruud Sondag is convinced of it. Together with fellow shareholders Kick Scholten, Egbert Vennik and ING Corporate Investments, his ambitions for Van Scherpenzeel Group are high. He wants to make this company thé connecting link in the circular economy. ‘We invest in the interchanges.’
Growing prosperity among the world’s population is driving up demand for raw materials, while these are becoming increasingly scarce. This leads to a fundamental change. The world is still dominated by the linear economy: obtaining raw materials, making products and then discarding or incinerating these. But we are growing towards becoming a circular economy. Within a circular economy, the aim is to reuse raw materials, identifying and extracting them from streams of waste. This is also called urban mining. Ruud Sondag says this is the way of the future, certainly in Europe. ‘We are a continent poor in raw materials. We have to come up with some other way of remaining autonomous and not causing the environment unnecessary damage. Mining raw materials from waste (secondary raw materials) is often much more attractive from the perspective of carbon emissions than industrial mining. A good example are the rare metals in cellphones, for instance.’
Management team Van Scherpenzeel Group, left to right, back row: Egbert Vennik, Jan Bloo, Roger Beuting, Eugène Rudolf; front row: Kick Scholten, Nico van Lith en Ruud Sondag.
Van Scherpenzeel Group, Sondag’s new company, is entirely devoted to the circular economy. It functions as a link between parties offering waste and buyers of the reusable raw materials that has been created from this waste. This waste consists of, among other things, collected plastic, filing paper or even odd lots of branded goods. Sondag explains that his company coordinates the processing and sale of these secondary raw materials. ‘A nice example is branded clothing that has suffered fire damage. Manufacturers did not want those sweaters to make their way back into commerce and so they had to be destroyed under supervision. That used to mean: into the fire. That is bad for the environment and five times more expensive than shredding it into tiny pieces and reusing it. We arrange that for the manufacturer.’ Sondag sees the demand for secondary raw materials growing rapidly. Germany is in the lead, he says, especially when it comes to recycling plastics. ‘They have already been doing it for 25 years. Van Scherpenzeel Group therefore has an extensive network of processors in Germany.’
Sondag is investing in Van Scherpenzeel Group together with his fellow shareholders Kick Scholten and Egbert Vennik. ING also recently joined as shareholder. Rob Engelschman, director of ING Corporate Investments, saw it as a great opportunity to invest directly in the circular economy. He sees Van Scherpenzeel Group as a frontrunner in corporate sustainability with excellent growth prospects. He also has much confidence in the company’s management. ‘We know them well. They have a good track record in the business. And the way they operate enhances our confidence. They managed a successful turnaround of one of the earlier merger partners.' (See below.) But Engelschman says the main reason for investing in the company is the belief in this company’s chances in the circular economy. ‘The strategic vision of Van Scherpenzeel Group is very promising. Like Sondag, we strongly believe in the development towards more secondary raw materials. You see that this is what politics, citizens and companies want.’ Sondag is happy that ING is on board because of its fire power for future growth and its expertise in acquisitions and financing. But that’s not the only reason. ‘The bank’s reputation strengthens our reputation as well.’
‘The strategic vision of Van Scherpenzeel Group is very promising. Like Sondag, we strongly believe in the development towards more secondary raw materials. You see that this is what politics, citizens and companies want.’ - Rob Engelschman, ING
Van Scherpenzeel Group has the ambition to grow substantially. It wants to continue developing as a knowledge company in a broad range of recyclable waste flows. It wants to be the preferred partner for companies who want to give their waste a new life. ‘Manufacturers can turn to us to outsource their recycling responsibility. We can contribute good ideas about what is possible with flows of waste or odd lots. We already do that for an insurer like Delta Lloyd. There we are part of the loss adjustment team for fire damage, for instance.’
Van Scherpenzeel Group’s growth strategy concentrates on interchanges, so that the company can act as a link between suppliers and buyers even more frequently. Sondag says that the company deliberately opted for a position in the centre of the waste chain. ‘So we do not collect and incinerate waste ourselves and will not be seeking any expansion there.’ The company does want to grow vertically for particular waste flows, such as paper, plastic and glass. This can be achieved by acquiring recycling installations (via acquisitions) that process waste into secondary raw materials, for instance. ‘For certain waste flows it is good to work with your own installations, while for others we opt to outsource the processing.’
Sondag believes it is the perfect time for the new company. He cites a number of arguments. For instance he sees a nice trend in the European regulations in favour of the circular economy. ‘The political goals used to be focused on high percentages of collected materials, such as glass. Now politics is moving in the direction of requiring manufacturers to process a certain percentage of recycled material in a new product or new packaging. This drives the use of secondary raw materials.’
‘We devote ourselves completely to what the future holds, an entirely new world.’ - Ruud Sondag, Van Scherpenzeel Group
Sondag says the timing is also perfect now because the market is looking for players like Van Scherpenzeel Group. In his view, the waste sector is having a tough time and most of the players are not ready for the circular economy. ‘Many companies are specialised in segments such as collection and incineration, but it’s uncertain whether those activities will continue to be profitable.’ Van Scherpenzeel can start with a clean slate. ‘We devote ourselves completely to what the future holds, an entirely new world.’
Van Scherpenzeel Group is based in Utrecht and has 50 employees and turnover of 50 million euros. The young company arose from the merger between Scherpenzeel BV and Kunststof Hergebruik BV. Scherpenzeel BV was a family business with seventy years of experience in destroying filing paper and odd lots of other products. The company had been operating at a loss over the past few years. The new owners, among them Ruud Sondag, former CEO of the Van Gansewinkel Group, had to cut costs and acquired new customers.
Kunststof Hergebruik was a joint initiative of large food producers (united in the Afvalfonds) to collect plastics from private households via the Dutch municipalities. The company had a monopoly until 1 January 2015. Because the market for plastic waste opened up, the Afvalfonds wanted to sell the company. The new general management, led by Roger Beuting, merged the two companies and is now charged with the further growth of the company.
ING Corporate Investments has been a 20-percent shareholder in the Van Scherpenzeel Group since the beginning of March. This is consistent with its policy to provide risk-bearing capital solutions to large and medium-sized European companies with prospects for growth. The Dutch state also contributes via the RVO Groeifaciliteit.