Walmart Heir Joins Family Offices in Fund to Eradicate Waste

(Bloomberg) -- Lukas Walton, grandson of Walmart Inc. founder Sam Walton, has joined at least nine other families and private foundations in backing a $25 million fund aimed at advancing the so-called circular economy in which waste is minimized.

It's the second of two funds raised by Singapore-based investment-management firm Circulate Capital, which focuses on climate-change mitigating technologies such as the development of sustainable textiles and insulation materials and hyper-efficient recycling. Circulate raised $106 million in 2019 from PepsiCo Inc., Procter & Gamble Co., Chanel and other corporations for a fund targeting Asia-based recycling companies that are working to reduce ocean-bound plastic waste. 

The money raised in the new round will go toward Asian recycling companies and also be used for direct investments in climate-tech startups, beginning with three in the U.S.: Arzeda, a Seattle-based biotech; Circ, a Virginia-based recycling technology company; and Phase Change Solutions, a North Carolina-based maker of plant-based temperature-stabilizing materials.

Unlike the first fund, whose investors are solely corporations, the latest was raised from private capital, such as family offices, said Rob Kaplan, Circulate's chief executive officer.

Private investors began approaching Circulate about a year ago, and Kaplan jumped at the chance “to build those bridges with the private investment community,” he said in an interview. 

“We knew early on it was going to take a lot more than $100 million to solve this problem,” Kaplan said. “It was going to take many, many billions of dollars.”

Other investors in the round include the family office of real estate investor Stanley Tan and a charitable foundation belonging to former Hillhouse Capital director Angela C. Huang and trader Geo Chen. 

Kaplan said he met Lukas Walton about seven years ago while working as director of sustainability for Walmart. The only child of Sam's late son, John and his wife Christy, Lukas, 35, has a net worth of $21.6 billion according to the Bloomberg Billionaires Index. In recent years he's emerged as a significant backer of green technologies and other sustainability-minded ventures. In addition to a stake in Walmart, he owns shares in First Solar Inc. worth about $500 million. 

Several years ago he formed Builders, the entity through which he invested in Circulate. Based in Chicago, Builders invests in non- and for-profit companies working to address environmental and societal problems, like overfishing and food insecurity. The organization has committed almost $2 billion in philanthropic capital over the past three years and made $1 billion in direct investments since 2014.

Builders' Circulate investment was made through a new fund it formed to focus on ocean health, according to Peter Bryant, a senior program officer. Circulate's strategy “is aligned with ours to capture opportunities at the nexus of climate innovation and circular plastics,” he said in a statement.

Family offices are boosting their allocations to climate-friendly investment strategies as the Earth warms and opportunities proliferate. A survey of wealthy families from 30 countries published in September showed 70% of them consider the shift toward net-zero carbon emissions “the greatest commercial opportunity of our age.” About a third of those surveyed said they were targeting investments that supported a transition to a low-carbon economy.

Read more: Bubble or Not, Jeremy Grantham Bets Fortune on Green Investing

Some are already demonstrating the potential. Billionaire investor Jeremy Grantham, an early Cassandra about the dangers of climate change, said his venture-capital portfolio returned 102% last year, led by green investments. 

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