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Circular textile ‘phoenix’ Renewcell is bought out of bankruptcy

Private equity firm Altor, which is renaming the company Circulose, recently raised 3 billion euros to invest in green businesses.

A pile of textile waste

Source: Shutterstock/Anwarul Kabir Photo

Swedish private equity firm Altor announced June 4 it will buy circular textile company Renewcell, which filed for bankruptcy in February. Renewcell’s name will be changed to Circulose, the name of its main product — an upcycled textile material made from castoff cotton clothing scraps.

Since the bankruptcy, fashion brands, fiber producers and environmental nonprofits rallied around Renewcell’s mission to bring low-carbon, recycled textiles to mass-market fashion. By March 28, the 12-year-old public company reported receiving multiple bids.

"We were confident that the phoenix would rise from the ashes," said Nicole Rycroft, executive director of forest-protection nonprofit Canopy, which worked closely with Renewcell, in a statement. "The fashion value chain is now better primed to ensure these innovations have an easier path to market and scale."

In January, Altor of Stockholm closed its largest funding round, of $3.23 billion. Altor "qualifies as an Article 8 fund, which in European Union terminology means that the fund will invest in companies promoting environmental or social characteristics," according to Altor’s press release. The firm focuses on the Nordic region as well as Germany, Austria and Switzerland. 

"Their strategy seems to be to ‘build companies’ and improve earnings," Richard Wielechowski, senior investment analyst at Planet Tracker, said of Altor. "This may well be where the Renewcell business will sit."

"I am not surprised the remnants of Renewcell have been picked up by someone," he said. "I am somewhat surprised it wasn’t a current [fashion] industry player given the likelihood they would be able to bring real operational expertise and potential synergies."

Circulose debuted in capsule collections of Levi’s jeans in 2022 and H&M dresses in 2020. Renewcell began scaling up Circulose production last summer at its massive Swedish plant, converted from a former brownfield paper mill site. However, it struggled to keep the quality of the product consistent, and sales collapsed in late 2023. In January, it failed to convince H&M Group to continue seven years of financial support and declared bankruptcy.

Renewcell ran out of time to reach the economies of scale it needed, its chief commercial officer Tricia Carey told GreenBiz in March. And some companies failed to honor their offtake agreements, leaving Renewcell in the lurch with nearly two years’ worth of Circulose on hand.

"We are so excited that Renewcell’s (now Circulose’s) low-carbon circular product is staying online," said Andres Fernandez, head of sustainability and sourcing at Mango. The fashion retailer seeks to embed circular design into every collection by 2030.

"We have witnessed a steady increase in brand purchases of Circulose-based fibers as the market starts to embrace its circular future," said Zhang Dongbin, vice general manager of viscose fiber maker Tangshan Sanyou Group. In August, the company agreed to buy 200,000 tonnes of Circulose over five years. "We are excited to see Renewcell’s next-gen capacity remain in place and look forward to continuing our collaboration, bringing sustainable, high-quality materials to the market at scale."

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