Future Returns: Impact Investing Firm Expands to the Oceans of Latin America and the Caribbean

The Singapore-based impact investing firm Circulate Capital launched a US$65 million initiative on Tuesday to reduce plastic pollution in Latin America and the Caribbean.

The strategy builds on Circulate Capital’s efforts in South Asia and Southeast Asia to spur the so-called circular economy by investing in companies that turn waste into usable products. Circulate Capital Ocean Fund, which had its first close in 2019, today has US$112 million in assets.

Backing the Latin America and Caribbean initiative are major global corporations, some of which also invested in its previous financing. Among these investors are Paris-based Danone, Michigan-based Dow, and London-based Unilever, companies that depend on sourcing recycled plastic material to meet their own sustainability commitments.

The Inter-American Development Bank Group’s IDB Lab also invested, and, in fact, encouraged Circulate Capital to take its approach to Latin America and the Caribbean, says Rob Kaplan, the firm’s founder.

Wealthy individuals and family offices also have taken an interest in financing the circular-economy approach to the ocean, including Builders Vision, a philanthropic and impact investing platform founded by Lukas Walton—grandson of Walmart founder Sam Walton. Builders Vision has been a longtime supporter of Circulate Capital, which was created in 2018 by Kaplan, a former director of sustainability at Walmart.

After initially learning of Circulate Capital’s approach for reducing plastic waste, Builders Vision realised it needed to back its effort aggressively, says James Lindsay, principal at Builders Vision. Their goal is to make investing in the ocean as popular for investors as investing in clean-tech solutions for the energy transition from fossil fuels.

Ocean health is one of three areas of investing today for Builders Vision, in addition to climate and energy, and food and agriculture, given the critical role oceans play in climate change and the global food supply.

“It’s a major focus and we want everyone to go look at the ocean sector like it’s completely investable, with market rates of return, just like we would with clean tech or sustainable real assets,” Lindsay says. An endowment or foundation may easily be able to include a clean-tech fund in its portfolio, but with “oceans there’s still a lot of hesitancy.”

There are good reasons for that, Lindsay says. One is that there are few companies that have been sold or gone public and thus been able to return money to investors. That’s started to change in the last two years, and Circulate Capital’s investments are part of that story, he says.

Penta recently spoke with Lindsay and Kaplan about Circulate Capital’s latest initiative, and the investing opportunities emerging for cleaning up the ocean.

A ‘Chicken-and-Egg’ Problem

The waste-per-capita ratio in Latin America is one of the highest in the world, and Kaplan says, expectations are that it will increase by at least 25% in the next 30 years. One reason is that more than 40 million people lack access to basic waste collection.

Cleaning up that waste, however, is a “chicken-and-egg problem,” because the waste needs to be collected before it can be recycled, but “why would you collect it if no one’s going to recycle it?” Kaplan says.

Policy developments in Chile and Colombia, however, have begun to create economic opportunities for local recyclers to start up and scale up, he says. Governments in Brazil and Mexico are beginning to consider similar actions. “That is creating a level playing field for these companies to grow much more rapidly,” Kaplan says.

These developments are similar to what Circulate Capital has seen in India, where it has invested in companies such as Mumbai-based Lucro Plastecycle, which recycles flexible plastics into new materials, and Srichakra Polyplast, in Hyderabad, India, which converts old plastic bottles into food-grade quality resins for new plastic bottles.

An Ocean Portfolio

Builders Vision has made 45 investments so far to support oceans, about half with fund managers and accelerators (which fund new entrepreneurs), and another half in direct investments, Lindsay says.

In addition to plastics, Builders invests in aquaculture through, for example, the Yield Lab, an accelerator for entrepreneurs developing sustainable agriculture systems. It also invests in “monitoring, reporting, and verification” technologies that evaluate efforts such as planting mangroves or seagrass to improve the ocean’s ability to absorb carbon, in addition to technologies that filter microplastics and integrate the material into manufacturing processes.

Most of Builders’ ocean investments are in Europe, where there are more ocean-oriented venture funds. That’s because of a European Union initiative to invest in start-up vehicles so they reach a viable size, Lindsay says. Builders’ goal, however, is to invest more with firms such as Circulate Capital that are based closer to the problems they are trying to solve.

“Navigating country risk without having a sense of the landscape is incredibly challenging,” he says. “You’re going to end up deploying some capital pretty poorly.”

Spurring Economic Development

For Circulate Capital, investing in and growing companies that can rethink supply chains for recycling—“from collecting and sorting to processing and manufacturing”—has ancillary benefits.

Not only do these companies contribute to the fight against climate change, they also create jobs and help local economies.

“Across Latin America and the Caribbean there are millions and millions of people whose livelihoods depend on collecting and trading plastic waste,” Kaplan says. “As we develop the supply chains, and help them scale, that creates more economic opportunity for those vulnerable populations—if it’s done in a responsible way, which is a big part of how we invest.”

In Kaplan’s view, the problem of plastic waste and ocean health will only be solved when “we stop thinking about it just as an environmental issue and start thinking about it as an economic development opportunity.”

Companies such as Lucro and Srichakra are beginning to scale, but Kaplan says the plastics problem in South Asia and Southeast Asia alone will still require “many, many billions” of dollars of investment to solve. Part of Circulate Capital’s role is to catalyse capital by proving these investments can work.

The firm’s second ocean fund, for instance, brought in development finance institutions such as the World Bank Group’s International Finance Corp. and the European Investment Bank in addition to family offices and private investors.

“We’re seeing more investors getting interested in the space. We’re seeing these companies successfully hit their targets and their milestones,” Kaplan says. “Those are all positive directions. But there’s still a lot more work to be done before we can say we’re moving the needle.”

A sharp technology sell-off has exposed a new anxiety on global markets: whether the enormous borrowing behind the artificial-intelligence infrastructure boom can generate sufficient returns as interest rates rise and Chinese competition intensifies.

The artificial-intelligence investment boom has powered technology shares, semiconductor manufacturers and data-centre operators to extraordinary heights. Last week, investors were given a reminder that much of this expansion is being built with borrowed money.

The technology-heavy Nasdaq Composite fell 4.5 per cent over the week ended October 16, its weakest performance since late June. Semiconductor shares suffered an even deeper correction, with the Philadelphia Semiconductor Index losing about 11.4 per cent.

The selling spread quickly through global markets. Micron Technology fell 14.6 per cent over the week, while South Korea’s Samsung Electronics and SK Hynix dropped approximately 18 per cent and 24 per cent respectively.

This was more than a routine bout of profit-taking. Investors were reassessing three interconnected risks: higher interest rates, the rapidly expanding debt burden attached to AI infrastructure and the prospect of stronger competition from Chinese memory-chip manufacturers.

The debt behind the AI build-out

Artificial intelligence requires a physical infrastructure network of enormous scale. Data centres must be built, advanced processors purchased, power supplies secured and cooling systems installed before customers begin generating meaningful revenue from them.

Technology companies are increasingly supplementing their own cash with corporate bonds, syndicated loans, equipment leases, private credit and project-level financing.

JPMorgan describes the emerging funding model as a combination of conventional corporate borrowing and project finance tied to individual data-centre assets. In Australia, the Reserve Bank estimates that syndicated loans accounted for approximately three-quarters of data-centre financing during 2025 and 2026 to date.

The numbers are becoming large enough to affect broader credit markets. The Federal Reserve Bank of Dallas has cited Wall Street estimates suggesting AI-related investment-grade bond issuance could approach US$300 billion in 2026 alone.

That borrowing is not automatically problematic. Debt can be an efficient way to finance long-lived infrastructure when future revenue is sufficiently predictable. The concern is that AI technology, customer demand and computing economics are changing much faster than the repayment schedules attached to the assets.

A data centre financed today may carry debt for years. Investors must therefore make assumptions about future utilisation rates, electricity prices, chip performance, customer concentration and the amount businesses will ultimately pay for AI computing.

When interest rates rise, those assumptions become less forgiving.

Inflation changes the calculation

September’s US inflation data intensified the pressure. Consumer prices increased 3.7 per cent over the year, ahead of market expectations and up from 3.4 per cent in August.

The hotter reading reduced confidence that interest rates would fall quickly and pushed bond yields higher. That matters particularly for companies whose valuations depend on profits expected well into the future, as well as highly leveraged infrastructure operators that may need to refinance.

CoreWeave has emerged as a closely watched test case. The specialist cloud-computing company has accumulated substantial debt and lease obligations to build AI capacity, while relying on a concentrated group of large technology customers.

Its shares fell sharply during the sell-off, while the cost of insuring its debt against default climbed. CoreWeave has argued that its contracted backlog more than covers its obligations and that financial markets do not always understand its business model. Nevertheless, its securities have become a proxy for investor confidence in debt-funded AI infrastructure.

Oracle, another major investor in AI computing capacity, fell 8.8 per cent in Friday trading, while CoreWeave dropped 15.5 per cent.

The question is shifting from how much AI infrastructure can be built to how profitably it can be operated.

China adds another source of pressure

Interest rates were not the only catalyst. Reports of advances by Chinese memory-chip producer ChangXin Memory Technologies raised concerns that lower-cost Chinese products could increase competition across the global semiconductor industry.

Memory chips are essential to AI systems, but the industry is historically cyclical. Periods of tight supply and high pricing can encourage rapid investment, eventually producing oversupply and falling margins.

The prospect of a well-funded Chinese competitor expanding its technological capabilities unsettled investors in Samsung, SK Hynix and Micron. It also demonstrated that AI-related demand does not insulate chipmakers from conventional competitive pressures.

That combination—slower rate cuts, more expensive financing and potentially cheaper supply—challenged the assumption that every company exposed to AI would enjoy continually expanding margins.

A reset rather than the end of the boom

The sell-off does not establish that the AI boom is ending. Demand for computing power remains strong, the largest technology companies continue to generate formidable cash flows and many infrastructure projects are backed by long-term customer contracts.

What has changed is the market’s willingness to overlook the price and financing structure of that growth.

The most resilient companies are likely to be those able to fund investment from operating cash flow, secure long-duration customers and demonstrate that new capacity will earn returns comfortably above its financing costs.

More speculative operators may face greater scrutiny, particularly where debt is expensive, customers are concentrated or expected revenue depends on demand that has not yet materialised.

For Australian investors, the lesson extends beyond US technology shares. Local data-centre operators, infrastructure funds, electricity suppliers and property groups are increasingly exposed to the same investment cycle.

Artificial intelligence may remain one of the defining growth themes of the decade. But last week’s correction showed that enthusiasm for the technology does not eliminate financial discipline.

The next stage of the AI boom will be judged not only by computing power, model performance or demand for chips, but by something more traditional: whether the assets being financed can generate enough cash to repay the money borrowed to build them.

Fact box

Nasdaq Composite: Down 4.5 per cent for the week ended October 16, 2026

Philadelphia Semiconductor Index: Down approximately 11.4 per cent

Micron Technology: Down approximately 14.6 per cent

Samsung Electronics: Down approximately 18 per cent

SK Hynix: Down approximately 24 per cent

US September inflation: 3.7 per cent annually

Estimated 2026 AI-related investment-grade issuance: Approximately US$300 billion