GreenHorizon

EcoCycle Plastics buyer due diligence
Due Diligence Finance

Context & Objectives

The target is EcoCycle Plastics (Lagos, Nigeria) with a factory capacity of 12 ktons/year PET recycling.

It generates USD 4.2M revenue (80% rPET sales, 20% government grants).

On the other hand, GreenHorizon fund has made commitments to reduce plastic waste and job creation in Africa.

Objectives

GreenHorizon has mandated Astragal to assess the ESG risks/opportunities, validate the ESG alignment and the financial upside of the target.

Our Approach

In addition to financial and legal aspects, the assignment covered the following ESG topics:

Environment

Recycling efficiency, energy/water use, regulatory compliance.

Social

Worker conditions, community relations, informal labour integration.

Governance

Anti-corruption, ESG policies, supplier assessment.

And required:

 

  • Site visits.
  • Interviews with management, workers, and NGOs.
  • Comparison to peers in Nigeria/Ghana.

Outcomes

Findings

Topics
Strengths
Risks
Opportunities
Environmental
82% recycling yield
20% pellet contamination rate
Securing 30% energy consumption via solar
0.8 kg CO₂/kg rPET
No wastewater treatment
15% premium for ISCC-certified rPET
Social
120 direct jobs + 300 informal workers
High churn rate for informal workers
Formalize 50% of pickers in 2 years
LTIFR 1.2 (vs. 3.0 regional avg.)
Community odour complaints
Partner with Lagos Recyclers Association for best practices sharing
Governance
No corruption incidents
No ESG-linked KPIs
Achieve EcoVadis Silver in 18 months
Transparent LAWMA permits
Lack of knowledge about tier 1 suppliers
Sustainable procurement policy

Financial & Impact projections

Metric
2024 Baseline
2027 Target
Δ
Revenue
USD 4.2M
USD 5.8M
+USD 1.6M
EBITDA Margin
18%
25%
+7%
Jobs Created
100 direct
200 direct + 500 formalized pickers
+600
Waste Diverted
12,000 tons
20,000 tons
+67%
CO₂ Avoided
-24 ktons
-40 ktons
-16 ktons

Recommendations

Pre-Acquisition:

  • Confirm LAWMA permit renewal and no pending fines.
  • Secure management commitment to USD 1.5M capex (solar, wastewater treatment) and waste picker formalization.


Post-Acquisition
:

  1. Install 500 kWp solar system: $100k/year savings.
  2. Pilot waste picker formalisation: 75 contracts per year.
  3. Launch ISCC certification: 15% price premium.