Conservation Resources sells stake to access distribution platform

Conservation Resource Partners has sold an equity stake to asset management firm Diffractive Managers in a deal designed to bring new investors into new and existing vehicles for its timber and agriculture strategies.

The size of the minority stake and transaction value were undisclosed.

Conservation’s chief executive Paul Young told Agri Investor that the firm was introduced to Diffractive by Boston-headquartered investment bank Colchester Partners in 2021. It had engaged Colchester to find a buyer for a stake in the firm to provide liquidity to co-founder John Tomlin upon his retirement, he explained.

Under the terms of the agreement, Boston-headquartered Diffractive will receive two seats on Conservation Resources board of directors, and the firm will retain independence and full control of investment process and functions. A key benefit of the deal for Conservation Resources, Young said, is access to Diffractive’s multichannel distribution platform and product structuring expertise, which can help provide access to an established network that includes a range of institutional and high-net-worth investors.

“Especially for a group like ours, where our expertise is not marketing and we don’t have anyone in our group related to distribution and marketing, this is a really good fit,” he said. “This group [Diffractive] has built an inside platform for distribution to help companies they have taken a minority interest in, and that’s what they have with us.”

Exeter, New Hampshire-headquartered Conservation Resources was established in 2004 and operated as Conservation Forestry before a 2019 rebranding. The firm has raised an invested $1 billion across six funds and 35 portfolio investments, which it says has resulted in permanent protection of 400,000 timber acres and 1,200 miles of rivers and streams.

In March 2019, Conservation Resources launched its debut agriculture fund with a target of $500 million. That fund, Conservation Resource Capital VI, had raised $50 million from 28 LPs as of an August regulatory filing.

“Both on the ag side and the timber side, we’re refocused on doing things differently than our generalist peers from an impact standpoint,” Young said.

A source familiar with Conservation Resources’ strategy told Agri Investor that with assistance from Diffractive’s distribution platform, the firm expects the Conservation Resource Capital VI vehicle to close in the first half of 2024.

Conservation Resources will also participate, according to Young, in new impact-focused offerings from Diffractive likely to utilize a fund of funds type structure in conjunction with its existing affiliates New York headquartered energy-focused investor Greenbacker Capital Management and New Jersey-headquartered Gitterman Wealth Management, which advises individuals, families and institutions.

“They have traditional equities. They have green infrastructure, but we are seeing in the market today where asset classes like agriculture and timber shine when there is so much volatility in the marketplaces,” Young added.

Diffractive will also offer help with execution of the private equity strategy, which he explained will be useful as the firm expands to different parts of the supply chain.

“They bring the knowledge on what the marketplace is looking for and are very focused and very excited – like everyone is today – on impact,” he added. “We were a logical choice for them because we were impact before impact was cool. We started in 2004 with an impact strategy before it became the strategy du jour.”