U.K.'s Plastic Banknotes Lead Supplier Innovia to Ink Dealby
Innovia agrees to buy Australian ink, toner-maker Barroven
Plastic U.K. five-pound notes to circulate in September
Innovia Group, the supplier of polymers used to make the U.K.’s first plastic banknotes, plans to buy an Australian maker of secure inks as central banks increasingly opt to replace paper currency.
The private equity-owned company has agreed to take over Barroven, a firm based in Sydney that makes colored inks and toners, Chief Executive Officer Mark Robertshaw said in an interview. He declined to give financial terms.
Innovia has all but cornered the global market for the polymer films used to make plastic bills, which are already in use in countries including Australia and Canada. The Bank of England plans to unveil a new five-pound polymer note next month, ahead of release into circulation in September. With 10-pound versions to follow next year, the Wigton, England-based company wants to control more of the sensitive supply chain needed to make plastic currency.
“The big growth story for us is that 97 percent of the world’s banknotes are on paper,” Robertshaw said. “That’s our opportunity -- to convert those into polymer.”
Arle Capital-owned Innovia’s polymer films are used to make 99.9 percent of the 50 billion plastic notes already in circulation in the world. The new notes feel like smooth, wafer-thin plastic, with some countries having opted for texture to be added.
The Bank of England has said plastic notes are more durable and hygienic than existing cotton and linen bills and they offer greater protection against counterfeiting and will save 100 million pounds ($145 million) over a decade. The central bank’s production of new money is carried out by printer De La Rue Plc.
Innovia plans to bid for a contract to supply its polymer for the U.K.’s planned plastic 20-pound notes, with a decision expected toward the end of the year, Robertshaw said. Making up about two-thirds of all notes in circulation, the denomination is the most widely-used in Britain. Barroven’s ink business will allow Innovia to broaden its range of technology for the manufacture of plastic banknotes.
The U.K.’s decision to polymerize the 20-pound note has captured the attention of the U.S. Department of the Treasury, though there is no move yet to make plastic versions of the $1 bill, Robertshaw said.
“The total number of notes in the U.K. and U.S. is still increasing,” he said. “Post the financial crisis people have been a little bit more uncertain about banks and like to have a bit of safety store in cash.”
The polymer used to make plastic banknotes comes from polypropylene, which is widely used in goods ranging from carpets to stationary folders. Under a patented production method, Innovia uses 82-foot towers to melt the chemical into a film that’s blown into room-sized bubbles. Security features such as windows and clear sections are then added before the film goes to the printer to be made into notes. The resulting money can be wiped clean and recycled.
“It’s like a chewing-gum bubble. No one else makes it the way we do,” Robertshaw said. The notes end up with “a unique DNA or fingerprint which you can detect.”