First look
Mombak hits $100m final close
Brazilian asset manager Mombak Gestora de Recursos has closed its debut Amazon Reforestation Fund on $100 million, co-founder and CEO Peter Fernandez told Agri Investor.
Canada Pension Plan Investment Board has committed $30 million to the vehicle, and the Rockefeller Foundation has backed the first-time fund with $5 million.
Other investors in the vehicle include Bain Capital, Byers Capital, Kaszek, USV and Conservation International Ventures. Conservation International is also acting as impact adviser to the fund.
Mombak aims to capture carbon through large-scale reforestation of degraded, unproductive Amazonian pastureland with a mix of 60 native Brazilian tree species and extensive use of assisted natural regeneration.
The firm intends to create high integrity credits by committing to never cut down the reforested trees for timber, and the land will be permanently and legally preserved.
This will also help to reverse biodiversity loss, create a dependable habitat for native flora and fauna, improve watershed assets and generate new sources of employment for local communities.
The Amazon Reforestation Fund is a closed-end 10-year vehicle that was launched in December 2022.
Fernandez confirmed that LPs will not receive returns in the shape of carbon credits – the strategy aims to deliver a “double digit” IRR.
“Reforestation is by far the largest opportunity available to humanity to remove carbon from the atmosphere,” said Fernandez.
“It’s bigger than all the other solutions put together. Brazil is the biggest opportunity to do reforestation – therefore, Brazil offers the world’s largest opportunity to do carbon removal.”
Read the full story here.
They said it
“USDA can put resources on the table, but the big dollars are going to come from the private sector and they’re going to be coming from agriculture, farmers, ranchers and forest owners”
US under-secretary for Farm Production and Conservation Robert Bonnie discusses how the $3bn Partnerships for Climate Smart Commodities is expected to play out.
Debt for nature swap
US and Peru sign $20m DFN
The US and Peru have signed a $20 million debt-for-nature swap that will reduce Peru’s debt payments to the US government by more than $20 million over the next 13 years, said a statement from the US Department of Treasury.
Peru will redirect payments they would have made to service its debt obligations to a conservation fund that will provide grants to protect and restore the country’s tropical forests.
The debt swap was made possible by contributions of $15 million from the US through the Tropical Forest and Coral Reef Conservation Act, and a combined donation of $3 million from four international non-governmental organizations.
Grants provided under the TFCCA program will support activities such as conserving protected areas, improving natural resource management, and supporting the development of sustainable livelihoods for communities that rely on forests.
Conservation International, the Nature Conservancy, Wildlife Conservation Society, and World Wildlife Fund were all involved in organizing the DFN.
This is the third debt-for-nature swap between the US and Peru. The first two swaps occurred in 2002 and 2008, and together generated around $36 million for the restoration, conservation, management and sustainable use of tropical forests.
Australia
Record ag exports
The value of Australian agricultural exports reached A$79.9 billion in 2022-23, a rise of A$12.5 billion (or 18.6 percent) from the year prior, setting a record high.
That’s according to data published by Rural Bank in the latest edition of its Australian Agricultural Exports report, which found that the value of exports is sitting 49.4 percent above the five-year average.
This was mostly driven by an increase in the value of broadacre crops and cotton, according to Rural Bank. Broadacre crops added A$7.1 billion in value to reach A$31 billion in 2022-23, thanks to consecutive years of record-setting crop production and high commodity prices.
Cotton, meanwhile, saw export values more than double from A$2.7 billion to A$4.9 billion, with strong performance also seen in beef production and sugar.
Rural Bank sounded a note of caution for the year ahead, though, forecasting that exports would fall below the record highs seen in the last two years thanks to a reduction in crop volumes – although this would still be the third-most-valuable year on record.
Australia’s foreign water ownership stats
The latest edition of Australia’s Register of foreign ownership of water entitlements has been published by the Australian Taxation Office, showing that the volume of water with a level of foreign ownership continued to increase in the 12 months to June 30, 2022.
The headline figures show that, of the 39,800GL of total water entitlement on issue in Australia, 4,503GL had a level of foreign ownership – or 11.3 percent of the total (up from 11.0 percent in 2021 and 10.99 percent in 2020).
Entities from Canada continued to top the list of countries that hold Australian water, closely followed by the US. China held onto third spot despite a significant drop in the amount of water held, from 604GL to 323GL.
Agriculture also continues to be the main use for water entitlements held by foreign entities, at 69.3 percent of the volume. It is the main use for entitlements held by Canada, China, the US, Hong Kong, the Netherlands, Germany and Singapore.
The findings continue to reflect strong interest in investing in permanent crops and associated water rights from large Canadian investors such as PSP Investments and Ontario Teachers’ Pension Plan.
Read the full story here.
Fund watch
Kilter Rural’s fund grows
Kilter Rural’s flagship open-ended farmland and water investment fund, the Kilter Agriculture Fund, has reached A$64 million in assets under management.
The capital has been used to acquire a collection of farms in the southern Riverina region of New South Wales, spanning more than 7,000 ha, which Kilter Rural intends to optimize and improve to increase their value, production levels – and, crucially, the amount of carbon sequestered and the levels of biodiversity across the site.
The fund held a first close on A$15 million earlier this year after launching in June, and has a long-term fundraising target of A$500 million. Its base case sees target returns of 10 percent for investors, with the potential for carbon and biodiversity to provide an additional income stream on top of this.
Kilter Rural has identified a pipeline of assets nearby, too, as it hopes to expand the fund’s assets over time.
Agri Investor visited the aggregation last week and will have further in-depth coverage of Kilter Rural’s strategy soon.
Read the full story here.
Domain Timber takes $225m
Domain Timber Advisors announced it had received a $75 million commitment for its Domain Timber Opportunity Fund, which the firm confirmed reached its final close in June.
The final close figure was not disclosed. The most recent regulatory filing for the fund is dated April 2023 and shows the vehicle had taken $40 million in commitments.
Separately, Domain said it had taken a $150 million commitment to a separately managed account. The identity of the investor was not disclosed.
The Domain Capital Group subsidiary’s timberland strategy sources non-industrial, degraded or under-utilized timberland. The asset manager specializes in managing such tracts and delivering economic and environmental uplift through property improvements and aggregation of the acquisitions.
“We are pleased to have exceeded the fundraising target for our value-add investment strategy,” said Patrick Neuman, director of business development at Domain Capital Group.
“The commitments are especially gratifying because they represent new investor relationships. We are humbled by their trust, look forward to meeting their expectations, and advancing a long and mutually beneficial partnership. Investors appreciate our lower middle-market approach and the years spent on the development of the strategy. It is exciting to see the team’s hard work and efforts pay off.”
People moves
CAM shuffles its pack
Natural capital investor Climate Asset Management has bolstered its senior ranks with the appointment of three independent directors, all joining with immediate effect.
Hugh Killen, former CEO of Australian Securities Exchange-listed cattle giant AACo, has joined the firm’s board as non-executive chair, while Irina Frolova has moved up from independent member to independent chair of CAM’s Natural Capital Fund investment committee.
Meanwhile, Andrea Abrahams, managing director of Voluntary Carbon Markets at the International Emissions Trading Association, has been appointed independent chair of the firm’s Nature-Based Carbon Fund investment committee.
The moves follow CAM’s appointment of Martin Berg as chief executive in May this year, following Christof Kutscher’s decision to step down.
Killen said in a statement: “What I like particularly about Climate Asset Management is that they are already walking the talk. In short order, they have assembled an experienced team that is, in my opinion, second to none in the natural capital space.”
The firm announced its first investment in Australia last week, the acquisition of an 1,800ha former sugar cane plantation in Queensland that it intends to convert into a macadamia orchard.
VC fundraising
Optera, a Colorado-based company providing ESG and carbon management software, raised $12 million in a Series A funding round led by Next Frontier Capital with participation from Blackhorn Ventures, Mucker Capital, Overture, Engage, Massive, SaaS Ventures, Valo Ventures, AngelList and Stout Street Capital.
Scala Biodesign, an Israeli biotechnology firm specialising in proteins, raised a $5.5 million seed funding round led by TLV Partners.
ReSeed, a Pennsylvania-based regenerative farming carbon credits developer, raised $4.6 million in a seed funding round led by One Small Planet, with participation from Thorn Partners and angel investors including Baratunde Thurston and Elizabeth Stewart, among others.
Twig, a British start-up that uses AI and robotics to identify sustainable ingredients, raised a $3.7 million funding round backed by Project A, Seedcamp, Zero Carbon Capital, UKI2S, Gaingels, and HackCapital.
Emata, a Ugandan agricultural finance provider for East African farmers, raised a $2.4 million seed funding round backed by African Renaissance Partners, Norrsken Accelerator, Zephyr Acorn and Draper Richards Kaplan Foundation.
Azaneo, an Australian electric weeding technology developer, closed a $900,000 pre-seed funding round backed by Tenacious Ventures, IP Group and AgFunder.
Biodel, an Arizona-based inputs provider for regenerative and organic farmers, raised an undisclosed amount in a Series A funding round led by Pangea Ventures.
Toopi Organics, a French biotechnology start-up developing plant biostimulants derived from the fermentation of human urine, closed a €16 million funding round led by VisVires New Protein, with participation from Edaphon, Noshaq Impact, MAIF Impact, BNP Paribas Développement, IRDI, and MakeSense.
Also in the news…
Agriculture finding its place within ‘new Washington consensus’
Policies such as the USDA’s Partnerships for Climate Smart Commodities are putting regenerative ag higher on LP priority lists (Agri Investor).
Australian cattle industry welcomes resumption of Indonesian trade
Officials have reached an agreement to resume the export of Australian buffalo and cattle to Indonesia following a ban due to an outbreak of lumpy skin disease (Beef Central).
EIB extends €15m venture debt loan to CrowdFarming
The direct-to-consumer marketplace has more than 300 farmers selling directly to consumers in 13 European countries (Agri Investor).
New Zealand outfit adds more biodiversity credit types
Carbonz has launched biodiversity action credits tied to the conservation of two bird species found on the country’s South Island (Carbon Pulse).
Verra inactivates dormant VCS methods amid ongoing review
US-based registry Verra is inactivating 10 methodologies of “low or no use” as part of an ongoing quality review (Quantum Commodity Intelligence).
Northern Trust launches digital carbon credit platform
Northern Trust said it had reached a crucial milestone by conducting entirely automated transactions on its platform (Funds Europe).
Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp
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