DFC Finalizes $50 Million Commitment to TIG’s Latin American Reforestation Strategy
July 02 2024 - 9:00AM
Business Wire
The U.S. International Development Finance Corporation (DFC)
announced today a $50 million commitment to help mobilize $1
billion for the BTG Pactual Timberland Investment Group’s (TIG)
Latin American reforestation strategy. The announcement was made in
Oslo, Norway, on the margins of the Tropical Forest Forum, at a
signing ceremony attended by White House Senior Advisor John
Podesta, DFC Chief Climate Officer Jake Levine, and TIG Chief
Sustainability Officer Mark Wishnie.
This formalized the investment that was originally highlighted
by President Biden during the Major Economies Forum on Energy and
Climate Change last year and represents the DFC’s largest-ever
carbon-negative transaction.
Jake Levine, DFC’s Chief Climate Officer, said, “This is a
groundbreaking transaction for DFC. It will sequester carbon
equivalent to the annual emissions of two-thirds of a million
vehicles, it will restore and protect a very special ecosystem, and
it will catalyze investment in the Brazilian bioeconomy. We are
proud of the innovative financing structure which incentivizes
reforestation and regeneration in areas key to promoting
biodiversity and protection of critical watersheds. Working with
exceptional partners such as BTG Pactual’s Timberland Investment
Group, the International Finance Corporation, and Conservation
International is the only way we can bring these transactions to
fruition and bring the scale of the capital markets to bear on the
imperative to drive financing for natural climate solutions.”
By investing in both fast-growing timber species and native
ecosystems, side by side, TIG aims to generate commercial revenue
while protecting and restoring critical habitats. To date, few
commercial strategies have dedicated half their land to restoration
and conservation efforts. This is a forward-leaning approach,
targeting deforested land that for many years was used for cattle
ranching or other low-intensity agriculture. Reforesting this land
will integrate commercial, biodiversity, and greenhouse gas
sequestration goals into a single strategy.
Gerrity Lansing, Head of TIG, said, “We commend the leadership
of both the Biden Administration and the DFC for recognizing the
crucial role that large-scale nature-based solutions – including
forest protection, restoration, and sustainable management – can
play for climate, biodiversity and rural development. This is yet
another important milestone for our strategy with Conservation
International, which will help deliver concrete outcomes on the
ground.”
“This transaction with DFC, in addition to directly increasing
the area of forest we can restore and sustainably manage, can help
to catalyze additional investment, as well as enhance the positive
impact of our investment through a sustainability-linked-loan
structure that rewards actions that improve water quality and
enhance habitat connectivity,” Wishnie said.
This sustainability-linked loan structure triggers a better
financial outcome for TIG if the strategy meets certain KPIs
designed to enhance biodiversity and water outcomes through
connectivity corridors for plants and animals, and watershed
buffers that can help provide ecosystem services for natural water
infrastructure.
The strategy focuses on the conservation, restoration, and
planting of deforested and degraded properties in selected regions
in Latin America, including the Cerrado biome in Brazil, one of the
most biodiverse, seasonally dry ecosystems in the world.
Approximately half of the Cerrado has already been converted to
other uses, and the biome continues to face high rates of
commodity-driven deforestation.
With Conservation International’s support, the strategy aims to
protect and restore approximately 135,000 hectares (more than
330,000 acres) of natural forests in deforested landscapes. The
strategy also seeks to plant millions of trees in sustainably
managed commercial tree farms, independently certified to Forest
Stewardship Council™ standards, on another approximately 135,000
hectares of previously deforested and degraded land. To date, TIG
has invested in 37,000 hectares, and has already planted more than
7 million seedlings and initiated restoration of approximately
2,600 hectares of natural forest.
ABOUT TIG
BTG Pactual (BPAC11) is the largest investment bank in Latin
America, with a market capitalization of approximately $25 billion,
offering a diverse range of services, including investment banking,
corporate lending, sales and trading, asset management, wealth
management, and banking. BTG Pactual Asset Management is a division
of BTG Pactual with an international presence and $176 billion in
assets under management and administration (as of Q1 2024). BTG
Pactual Timberland Investment Group (TIG), a division of BTG
Pactual Asset Management, is one of the world’s largest timberland
managers with $7.1 billion assets and commitments and nearly 3
million acres under management throughout the United States and
Latin America (as of Q1 2024). TIG’s team of more than 160
professionals has an on-the-ground presence through 21 offices,
bringing local, regional, and global experience to bear on the
management of client investments. For more information, please
visit www.timberlandinvestmentgroup.com.
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Rodrigo Bandeira rodrigo.bandeira@btgpactual.com