The Steve Jobs of Sus­tain­abil­ity

Meet the Bel­gian se­rial en­tre­pre­neur who has some unique ideas for solid waste man­age­ment

The Economic Times - - Deep Dive - Hari Pu­lakkat

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

$555 mil­lion

in Glob­alLogic

$770 mil­lion

in funds, in­clud­ing Apax Part­ners, KKR, TPG, Blackstone and Vishal Neve­tia’s IVFA and coin­vest­ment in ACT Broad­band

$300 mil­lion

in Renuka Ram­nath’s Mul­ti­ples

OTH­ERS

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

KEY INVSTMENTS

in Edel­weiss ARC over 4 yrs

$180 mil­lion

in TVS Lo­gis­tics

$150 mil­lion

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

Cor­po­rate Park

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

Group

$201 mil­lion

In­fo­line

in San­mar

OTHER DEALS IN­CLUDE:

Ac­qui­si­tion of Thomas Cook In­dia, Ster­ling Hol­i­days, Ikya, 26% in ICICI Lom­bard

IN TALKS

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

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