(Bloomberg) -- Patria Investments Ltd., one of Latin America’s biggest alternative-asset managers, is launching its first reforestation fund with a goal of raising $100 million.
The plan is to buy degraded land and restore forests by planting native trees, such as ipe and rosewood, and high-priced timber, such as African mahogany, according to Jose Augusto Teixeira, a Patria partner and the firm’s chief executive officer for Brazil. Cacao and coffee will also be grown to create “symbiotic agriculture ecosystems,” Teixeira said.
“Our fund differentiates itself from some others because it won’t focus on buying land in remote areas such as in the Amazon region and also won’t plant commercial eucalyptus or pine forests,” he said.
Patria, with about $43 billion under management, said its goal is to return money to investors in 15 years with annual yields as high as 12% in dollar terms. It will reduce risks by prioritizing investments in the Atlantic rainforest region, which is more degraded and closest to the nation’s biggest cities, where transportation and logistics infrastructure is better and where land ownership is more clearly defined. The Atlantic rainforest is also the only one protected by law in Brazil, according to Beatriz Lutz, the fund’s portfolio manager.
Brazil, which is home to 60% of the Amazon forest, has been struggling to preserve that vital ecosystem. Degradation of the region soared in the first four months of 2024 because of fires and a lack of preventative monitoring, according to Brazilian environmental officials. About 7,340 square kilometers (2,834 square miles) of the rainforest were depleted between January and April, data from the national space agency showed.
San Francisco-based Pachama Inc. will help Patria’s fund managers assess the land’s suitability for investment, monitor and protect forests using satellites and artificial intelligence, and help sell carbon credits — an important way the fund will generate returns for investors. Other gains are expected to come from selling agricultural products and exotic timber while supporting inclusive community development, according to Patria.
Patria’s partners and its high-net-worth clients are already investing in the fund, Teixeira said. Development banks and multilateral agencies are also expected to participate, he said.
Patria, whose shares are down about 28% this year, has been on a buying spree since its initial public offering in January 2021 on the Nasdaq.
It announced in October the purchase of Abrdn Plc’s private equity business for as much as £100 million ($132 million), and said in July that it completed the acquisition of Colombian real estate asset-management firm Nexus Capital. In May it received approvals to integrate real estate funds it bought from Credit Suisse in Brazil.
©2024 Bloomberg L.P.
