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 Investments has committed $30 million to the vehicle and the Rockefeller Foundation has committed $5 million.
Other investors include Bain Capital, Byers Capital, Kaszek, USV and Conservation International Ventures. Conservation International is also acting as impact adviser to the fund.
“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.”
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-ended 10-year vehicle that was launched in December 2022.
Fernandez confirmed LPs will not receive returns in the shape of carbon credits – the strategy aims to deliver a “double digit” IRR.
Raising the first-time vehicle “wasn’t easy,” added Fernandez, but the opportunity to invest in high integrity credits, the seemingly “unlimited” demand for such credits and their scarce supply allowed the firm to reach its target in less than a year.
The CEO explained that Mombak developed its carbon removal strategy in collaboration with “the world’s most rigorous buyers of carbon removal,” whose internal agronomists and scientists worked with those recruited by Mombak to develop its formula.
“Basically, you have to have unquestionable additionality, the lowest possible leakage or zero leakage and very long durability,” said Fernandez.
“We are doing carbon removal at the highest possible level of integrity and with very significant co-benefits. We’re reforesting the freaking Amazon – everyone understands why that’s valuable.
“It increases biodiversity and helps keep the rain falling on the south of Brazil. What’s in the south of Brazil? The world’s largest soy crop. If we lose the rain from the Amazon, we lose the world’s largest soy crop. [Access to] Ukrainian wheat is a problem but [losing] Brazilian soy is way bigger problem and it’s just soy, it’s also coffee, corn, ethanol – everything is grown in the south of Brazil.”
Fernandez is the former CEO of Brazilian ride hailing app 99, which became the country’s first technology unicorn.
Mombak co-founder and CFO Gabriel Silva is the former CFO of Brazil’s Nubank, a fintech bank founded in 2013 that went on to became the country’s first technology decacorn.