Koala fund chews into demand for developer offsets

Medium_koala_sqpks9
Australian Financial Review | 15 August 2021

Koala fund chews into demand for developer offsets
 
by NICK LENAGHAN
 
Online alternative asset investment platform iPartners is pushing into the agricultural sector, launching a $20 million fund to acquire farmland for protected koala habitat to generate returns through its use as a biodiversity offset.
 
The Koala Farmland Fund will purchase farmland in south-east Queensland, where government regulations require developers responsible for habitat destruction to mitigate or replace vegetation.
 
The proposed fund is among a broader raft of farmland initiatives that marry demand for investment returns with the sustainability goals of biodiversity and decarbonisation. Major portfolios are being accumulated by players ranging from environmental groups such as Greening Australia to institutional investors including Tiverton Agriculture and Packhorse Pastoral, which tap demand for carbon offsets.
 
In Queensland, developers who destroy habitats in designated koala areas can pay a fee for the offset, buy land to replace the trees, or outsource the program to a third party to manage the offset. There are offset schemes at three levels of government, with the state government providing an option of financial settlements for offsets, which sets a floor price.
 
While the fund’s main target is biodiversity offsets, it will combine that with agricultural revenue, farmhouse rental, and farmland capital growth.
 
“The fund creates a climate-resilient fund which provides solid returns to a new and growing group of investors who are committed to the protection of koalas and their population numbers, as well as the environment,” iPartners’ Alex Thompson said.
 
With a raising of up to $20 million, the fund aims to generate an internal rate of return above 13 per cent, with forecast distributions of 2 per cent in its second year, followed by 10 per cent annually, according to a fund flyer.
 
To be managed by Country Asset Management, the farmland fund plans to acquire up to five farms with the right ecology and zoning to grow trees as offsets for koalas.
 
The properties will be within 150 kilometres of Brisbane, where increasing development has created strong demand for offsets and where further revenue can be generated through accommodation, tourism and farming. It is expected the properties will eventually be sold off as lifestyle farms.
 
Set up four years ago and led by joint managing directors Travis Miller and Rob Nankivell, the iPartners platform has raised more than $750 million, with investments into private equity, asset-backed debt, infrastructure and property.
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