Genex Power founder eyes similar early opportunity for Permagen in carbon

While starting his career as an investment banker at Macquarie, Simon Kidston has devoted the latter part of his career to the clean energy supply chain. 

Renewable energy, in particular, has been a passion of his for the past 10 years, having founded the now ASX-listed renewable energy company, Genex Power, and more recently, Permagen, which is focused on the plantings business and carbon credits. 

Simon, along with his Permagen co-founders Ben Guo and Harrison Holihan, are leveraging their learnings from Genex Power into the carbon space. 

At Genex Power, the team set upon repurposing an old gold mine in remote northern Queensland, which happens to be called Kidston (yes, there is a family connection). Essentially, the strategy was to utilise all the infrastructure left behind from what has been a massive gold mine that has been depleted of gold, and repurpose it for renewable energy purposes. 

Over the course of 10 years Genex has invested $1 billion in capital into creating a renewable energy hub that comprises solar and pump hydro, as well as wind.

Leveraging into the carbon space

About two years ago Simon stepped back from being a full time executive at Genex Power to devote time to establishing Permagen, a carbon developer focused on producing carbon offsets from rural land that will help heavy emitters reach their carbon reduction goals. 

He recognised that the dynamics that are emerging in carbon are similar to what he observed 10 years ago in renewable energy. Like carbon credits today, ten years ago renewable energy faced a lot of scepticism and there really wasn’t a lot of capital flowing into the space. 

“This is a space I’m very deeply invested in and so I can see amazing opportunities to build businesses and build wealth for investors. The thematics that are driving this now are multi-decade — this is not just a short term thing — it’s a long-term structural change of decarbonisation. There are a lot of ways you can play that as an investor, in my case it’s renewable energy and carbon credits,” Simon explained. 

Regarding Genex Power he said “We saw an opportunity to get in early, create a business with scale that was investible, and then over time as that business matured, it attracted institutional capital. And we could deploy a lot of capital to build up that business.” 

He now sees a similar opportunity for Permagen in carbon, specifically in plantings. 

“Initially at Permagen, we spent a lot of time really understanding the science behind the various methodologies, and we decided we’d focus on eligible plantings or reforestation as our particular point of difference.” 

“We wanted to pursue a model that was scalable, which was undeniably robust. No one disputes that as trees grow, carbon is absorbed. So it is measurable, scalable, and robust, and those were the characteristics we were looking for in the carbon sector.” 

“Having chosen that as our methodology, we really needed to understand the economics of planting trees, which is obviously more capital intensive than a lot of the other methodologies.” 

“To maximise our return in terms of carbon credits from a particular piece of land, we needed to focus our efforts on identifying and pursuing land that has a high carbon yield.”

“So, over a period of 18 months, we developed a software package to measure — down to every single paddock in the country — the carbon yield of that paddock which is represented to us as a heatmap.” 

“This tool has proved very valuable in targeting the right land with the highest carbon potential. We demonstrated proof of concept that this science is working, and have these four sites that are now in the process of being planted. We’ve also executed a deal with a major emitter, who’s got 1000s upon 1000s of hectares of land, and will do a carbon project on their land.” 

Simon also mentions Permagen’s partnerships with Kakariki Capital on its new Land Generation Fund, and how they are working together to roll out carbon planting projects at real scale. 

Read: Kakariki Land Generation Fund: Investing in carbon sequestration

“Permagen already had proof of concept through the project we’ve already delivered, demonstrating that by using our IP we can find the right land, with the highest yield. As we’re incentivised to maximise the success of the projects that will flow through to the return for the Kakariki’s investors.”

A track record and growing business

The permagen team has a track record of building businesses, having funded private businesses and successfully listing them on the stock exchange — Genex Power being the most recent example. 

Simon and the Permagen team appear to be following a similar model now. Late last year they raised $2 million from some really high calibre investors, who provided not  just money but strategic partnerships. 

One of Permagen’s foundation shareholders was Regal Funds Management, which has a carbon business called Attunga Capital. And then there’s Square Resources who are a large commodities trader that bring deep relationships with major emitters and were keen to expand their offerings to carbon via Permagen. Another group is Growth Farmers, a very large agricultural farm manager with $700 million of property on the eastern seaboard.

That raise was completed last December and the capital is now being deployed, while the company continues to look ahead to further growth. 

Simon explained “Having successfully executed on our initial portfolio and looking to fund the next stage of growth, we are now looking to raise a further $3 million.”For more information contact Simon Kidston at sk@permagen.com.au or visit https://permagen.com.au/