Investment JV set to launch Australian carbon credits fund

A joint venture between investment managers Roc Partners and C6 Investment Management is set to launch one of Australia’s first carbon credits fund, generated by reforestation initiatives.

The joint venture, Silva Capital, announced the first close of the Silva Carbon Origination Fund after raising $80 million between Rio Tinto, Qantas and BHP as foundation investors.

The fund, seeking to raise $250 million in total, aims to provide investors access to high-integrity Australian Carbon Credit Units (ACCUs) generated from land reforestation activity combined with sustainable agriculture practices to support the pathway to a low-carbon economy.

“We are thrilled to have Rio Tinto, Qantas and BHP as foundation investors in the Silva Carbon Origination Fund. Their partnership and commitment highlight the importance of high-integrity carbon credits in the transition to a low-carbon economy,” Raphael Wood, Silva Capital Co-Managing Director, said.

“This fund represents not only an investment in carbon abatement but a significant milestone in Australia’s carbon market, that will, importantly, support the long-term success of our farming communities and nature repair.”

At the core of Silva Capital’s investment strategy for the fund is investing in the economic benefits of agricultural land without sacrificing its ecological sustainability through “large-scale carbon sequestration projects” that involve reforesting previously cleared areas but allowing the land to remain productive for farming purposes.

According to the joint venture investment manager, these plans not only “benefit local communities” but also promote “habitat restoration and biodiversity protection” by balancing “agricultural productivity and environmental stewardship.

“Sustainable agriculture is at the forefront of our investment strategy. With the Silva Carbon Origination Fund, we aim to create a portfolio of mixed farming land with significant canopy cover, generating a large volume of high-integrity carbon credits,” Brad Mytton, Silva Capital Co-Managing Director, said.

“The Fund has been designed to appeal to both corporate investors seeking to access carbon credits and institutional investors seeking portfolio diversification, ensuring that we can maximise the volume of capital invested into the sector, capital which is needed to enable Australia to meet its decarbonisation targets.”

According to the announcement from Silva Capital, the fund accommodates both financial investors looking for attractive risk-weighted returns as well as carbon market participants looking for ACCUs to round off their decarbonisation efforts and address compliance requirements.

Representatives from the three foundation investors – Rio Tinto, Qantas and BHP – all said that investing in the fund was the first step in decarbonising their operations and was a sign that they are committed to meeting their climate and emission targets, as well as compliance obligations.