The blended capital fund is looking to raise up to £120 million (about $161 million) to restore landscapes in partnership with landowners and project developers in England. Big Nature Impact raised £30 million ($40 million) in first loss capital from Defra, the UK’s Department for Environment, Food and Rural Affairs responsible for environmental protection and food production in rural communities
Defra will only receive distributions after private investors receive their capital back, plus a preferred return of 7%. “Structuring Defra’s capital as downside protection was fundamental to unlocking private finance at scale into what remains a relatively new asset class,” said Richard Speak of Finance Earth, the fund’s manager.
Executives on the London-based impact advisor’s investment team committed £2 million ($2.7 million) in the $87 million first close. Other limited partners include Zurich Insurance Group, Admiral Group, Esmée Fairbairn Foundation and the Church of England’s Social Impact Investment Program.
Nature as infrastructure
Rather than depending on land appreciation, farming, or commercial forestry for returns, the Big Nature Impact Fund will work with owners to restore woodlands, peatlands and other ecosystems and generate long-term revenue via high-quality carbon and biodiversity credits, such as the UK’s novel biodiversity compliance market (see, “Can the UK’s market for trading nature credits deliver ‘biodiversity net gain’?”).
“We designed the fund from the outset to target high-integrity nature restoration, working with landowners, project developers and local communities to fund the right activities in the right places,” said Speak. The initial close, he said, “proves that blended finance can successfully mobilize private capital to meet the UK’s climate and nature goals.”
