The Steve Jobs of Sustainability
Meet the Belgian serial entrepreneur who has some unique ideas for solid waste management
a mere $6.5 billion in March 2016. That’s only a tenth of neighbour US, the fifth largest FDI partner, as per the latest government figures.
“Our long investment horizon aligns to the financing and capital needs of India’s economy, growing entrepreneur culture and the strength of business in the country,” says Suyi Kim, managing director, head of Asia Pacific at CPPIB.
From the building blocks — airports, roads, power plants, warehouses, logistics parks, commercial real estate, financial services and even ecommerce — their bets are becoming bolder and complex, the cheque sizes bigger. Last February, instead of safe havens like government securities, Ontario Teachers decided to put its pension capital to back a $200-million capital raise by Snapdeal. Late last year, Prem Watsa’s Fairfax India Holdings got Reserve Bank of India’s nod to acquire a controlling 51% slice in the sleepy community lender from Kerala, Catholic Syrian Bank. This was the second bold bet within a year of the man considered Canada’s Warren Buffet, having bought into GVK’s Bangalore airport earlier in 2016.
“We are currently at the initial stages of seeing direct investments by the larger pension funds. As they get a better understanding of the market and more confidence, we expect an increased allocation,” feels veteran invetment banker Ashok Wadhwa, group CEO, Ambit, who has advised several Canadian investors in the recent past.
Four years after buying GlobalLogic, a Silicon Valley-headquartered IT outsourcing firm started by four IITians with core operations in India for $420 million, PE Group Apax Partners wanted to take some money off the table. Enter CPPIB. CPPIB historically has been one of the biggest investors in Apax’s funds as a sponsor — or limited partner (LP) in PE jargonspeak — and has been pressing them for co-investment or counderwriting opportunities after tasting success with Kinetic Concepts in 2011.
In just three years, GlobalLogic, too, had doubled in size under Apax’s watch, so it could either cash out entirely or dilute partially and still enjoy the upside. It chose the latter and within three months of bilateral discussion, CPPIB closed its first technology services investment at a $1.5-billion valuation to become co-owners of the company. Apax, too, laughed its way to the bank.
For most, the rising Canadian institutional interest is a natural progression that comes after the previous waves of Singaporean, to buy 6% in Kotak
in funds, including Apax Partners, KKR, TPG, Blackstone and Vishal Nevetia’s IVFA and coinvestment in ACT Broadband
in Renuka Ramnath’s Multiples
Phoenix Mills, L&T IDPL, JVs with Kotak Mahindra, Shapoorji Pallonji
WTo deploy by 2016
$3 billion $1.3 billion
already deployed in Indian equities
commitment for SBIBrookfield stressed assets JV
in Edelweiss ARC over 4 yrs
in TVS Logistics
JV fund with Peninsular Land for loans to residential developers
in Indian renewable sector
$850 million 1,200 cr FAIRFAX
Resurgent Power — JV with Tata Power, ICICI Venture KIA & Oman’s SGRF Committed
ONTARIO TEACHER’S PENSION FUND
in GVK’s Bangalore International Airport
$300 million PSP INVESTMENTS
Isolux Corsan’s Committed $4.6 billion so far e give awards to companies that pollute less,” said Gunter Pauli at a recent conference in Bengaluru organised by Ashoka Trust for Research in Ecology and the Environment (Atree). “And we put in jail people who steal less. We forget that polluting less is still pollution.” For Pauli, nothing more than zero waste is acceptable: no landfills, no burning, no discharge into the rivers, no e-waste to ship into another country.
Pauli, a Belgian serial entrepreneur who lives in Japan and now works in South Africa — and who has sometimes been called the Steve Jobs of sustainability — has projects in four continents on sustainable farming, on handling urban solid waste, on using the ocean for future food, energy, and so on. In 1992, he built a zero-emissions factory making soaps out of wood. A year later, he found out that it was non-sustainable. This learning resulted in the non-profit Zero Emissions Research and Initiatives (ZERI) in 1994, based in Tokyo. It has since grown around the world. Last year, a report by the University
KEY INVESTMENTS OTHERS
road & Infra Hiranandani office portfolio in Snapdeal to acquire RCom’s tower assets
power plants of Gammon
OTHER DEALS INCLUDE:
Acquisition of Thomas Cook India, Sterling Holidays, Ikya, 26% in ICICI Lombard
in India controlling interest in Catholic Syrian Bank Source: Industry, includes special situation credit & co-investments of Pennsylvania on global think tanks ranked ZERI at number seven among those with the most innovative ideas. On the day Pauli spoke in Bengaluru, a newspaper had reported about a plan to use trains to take garbage out of the city, to a town called Madhugiri about 100 kilometres away for incineration. Bengaluru no longer has space in neighbouring areas to bury garbage. Building incinerators in the city is an idea that will be opposed from the beginning. Residents of Madhugiri are opposing it, too.
Urban solid waste is a seemingly intractable problem in Indian cities, as the garbage mounts and cities run out of space. ZERI has worked on solid waste around the world and has got together some unique ideas for solid waste management. “They have not run out of space,” says Pauli. “They have run out of ideas to make it work. The easiest solution is to ship it out. We first dump it, and then we incinerate it, and we realise that even the incinerate is a toxin.” ZERI has worked with the city of Milan in Italy to reduce waste by 90%. The nonprofit’s plan is to get the biomass out and do useful things with it. It is working with the city of Milan to recover organic waste. “Milan is now recovering 90 kg of biomass per person per year. It is number one in the world.”
Separating organic waste is one thing, making use of it another. Composting does not generate enough money. “In the city, you can’t compost,” says Pauli, “as composting generates methane. You have to generate value.” The trick is to separate the bio-waste further, with an eye on commercial activity. Pauli’s prime exhibit is coffee waste, increasing in the country as
Compared to their US counterparts, the Canadians have been far more conservative and insular in scoping out high-growth emerging market opportunities. It’s only in the last 3-4 years that they have looked beyond the usual happy hunting grounds of global equities, government bonds (read US and other OECD countries) and hedge funds to adapt a far global and diversified portfolio, largely on account of volatile energy prices.
For example, CDPQ, which looked to deploying just under $3 billion in India by the end of 2016 alone, has been buoyed by simpler rules, smoother implementation of policy and a central government that is almost “managerial” in fixing problems. And that’s a big shift; only 8-9% of their $250 billion assets under management have so far been allocated for emerging markets, including India.
In retrospect, this inherent conservatism perhaps saved the Canadian firms from the post Lehman meltdown, when most US firms got bruised badly. Similarly, American PE groups that rushed to India in the 2004-08 era, too, have had a chequered portfolio. The Canadians, in comparison, had no baggage to deal with. For example, it took Brookfield seven years after setting up its India outpost to break the clutter and establish itself as an coffee shops become popular in the cities. “We can take a tonne of coffee waste and produce a tonne of mushrooms.”
So separation at the source is the first step, not always easy in a country like India. “Coffee and tea waste are a substrate for mushrooms. It does not make any sense to compost it. You must use it to make food.” Similarly, citrus fruit peel can be used to make detergents. “We have
mapped hundreds of opportunities. The question is, do we have the entrepreneurs to turn them around?”
Once you generate value for your waste, people look at it differently. Would you throw away your coffee waste if someone pays for it? “This is what we call systemic businesses, the interconnected businesses.” Brazil has eight such factories, according to Pauli. Mexico is starting a factory to process mango seeds and turn it into an additive for bread. “How many mango seeds would India have? Your bread is junk bread. Spongey and junk. You can make good bread by using mango seeds.” Similarly, unused part of vegetables can be used to feed maggots, which in turn can feed the chickens. Maggots can digest almost everything.
Once the organic waste is separated and used up, only a small part is left for composting. Since organic waste is more than half of the city waste, a series of small and networked factories can reduce the total waste significantly. The rest is dominated by two waste streams: plastic and electronic waste. ZERI claims to have a technology to break down plastics using enzymes. The toxic chlorinated plastics are broken down using a combination of enzymes and heat treatment, and then the other plastics are also treated in a similar way. “There are compounds in plastics that industry will not tell you because it is less than 1%,” says Pauli. With a judicious use of enzymes, heat and high pressure, plastics can be turned into a fuel that can be burned safely.
The last category is e -waste, an extremely toxic and difficult category to handle. The state-of-the-art method is to evaporate them in a vacuum. “This is a non-starter technology,” says Pauli. “We focus on another technology called chelation.” It crushes the waste and then allows you to take out each constituent separately for reuse.
In the end, every bit of waste — organic, plastic, and metals — goes into another product that will be used. Pauli has one project in India, near Kaziranga National Park, where he has helped grow mushrooms using tea waste. No one has asked him yet to deal with Indian urban waste. Is the waste train a better alternative?
GUNTER PAULI SERIAL ENTREPRENEUR