Ardian seeks €500m for new nature-based fund

The Article 9 fund will invest in projects to restore forests, wetlands and mangroves in developing countries.

Paris-based Ardian has partnered with aDryada, a French developer of nature-based projects, to launch a new fund and strategy.

Averrhoa Nature-Based Solutions is a strategy that “aims to finance projects to restore forests, wetlands and mangroves in order to sequester large quantities of carbon,” Ardian said in a statement. The fund, by the same name, is an Article 9 fund that will be managed by Ardian with aDryada acting as adviser.

“Ardian will manage the fund, just like any other Ardian fund, but we will have the support of aDryada in terms of expertise, sourcing of deals and expertise on a theme, which is highly technical, for which you have to plan, make sure that you are measuring [carbon capture and biodiversity impact] the right way, that you’re planting the right species,” Mathias Burghardt, Ardian’s head of infrastructure, explained.

He declined to comment on the fundraising target, but one source told Infrastructure Investor that it is €500 million.

According to the statement, the aim is to invest €1.5 billion in sequestration projects. That amount is understood to include equity, debt and potentially, subsidies.

Averrhoa Nature-Based Solutions will invest primarily – around 75 percent – in emerging markets.

As for the technical expertise required, Ardian is in the process of building a team in-house that will manage the strategy. The firm is recruiting a CEO, whose “job will be to do the project selection and make decisions related to asset management,” Burghardt said. “But he or she will benefit from the support of aDryada, which will act as a super operating partner and source deals.”

Asked how this strategy can be classified as infrastructure, Burghardt replied: “The risk-return profile will be no different than an infrastructure greenfield project in the same location.”

The sequestered carbon, which the two partners estimate will amount to around 150 million tonnes, “will be used to generate high-quality carbon credits verified by third-party experts,” according to the statement.

Revenue will be generated by the carbon credits, and in future, biodiversity certificates, that long-term offtakers will purchase.

“Offtakers will be large industrial companies that need to compensate for their emissions or impact,” Burghardt explained.

Industrial companies will also invest in the fund alongside traditional LPs – institutional investors, insurance companies and pension funds.

“That was the case for clean hydrogen, where half of the investors were industrial companies, people from the energy sector for example, wanting to address their emissions,” Burghardt commented, referring to the Clean H2 Infra Fund, raised by Hy24, a joint venture between Ardian and FiveT Hydrogen.

However, the new nature-based solutions strategy goes beyond emissions and environmental impact. Its third pillar focuses on socioeconomic benefits for local populations.

“When you restore forests in areas that were destroyed by planting other things, or degraded, you have to find ways to [help] the local population,” Burghardt said. One way to do that is through job creation.

“This is one of the most complex parts of the project because we need to train people, we need to develop infrastructure, schools and roads… so, that people will look at the forest as something that will help them improve their livelihoods, not something that will constrain them,” added Fabio Ferrari, aDryada’s CEO. “And finally, we are going to share part of the revenues that we get from carbon credits with the local population.”

For Ardian, this new strategy represents not only embarking on a new theme but also an expansion of its geographic scope.

“We used to invest in OECD countries, now we’re going beyond and we would never have done it without Fabio [Ferrari and aDryada],” Burghardt said. “So, it’s a big step for Ardian.”