For Nigel Sharp, the Tiverton Agriculture Impact Fund (TAIF), launched in 2017, was a learning process that allowed him and his team to test new methods of regenerative agriculture.
They’re now partnering with Sentient Impact to launch the Forever Fund, a vehicle that will allow them to apply the lessons learned, and double down on the areas where the first fund was successful.
With a refined offering, Nigel says the fund will be lower risk, opening up access to a wider range of investors, and hopefully, attract institutional investment on the way to a target $100 million fund.
“Tiverton was a higher risk approach at the start, because there were a lot of unknowns in farming this way.” Nigel says. “Particularly where we were pushing the boundaries on how we include the biodiversity and climate outcomes. We’ve done a lot of learning, which makes the investment proposition less risky.”
The partnership has already acquired an asset for the fund. Sunnyside is a property near Albany in WA, and for this first asset it’s what they won’t be doing to it that contributes to its impact. The land will be reserved for biodiversity management, with hopes it will be linked to nature reserves to operate as a ‘regional corridor’.
The model was tried and tested with the Great Cumbung asset, where they worked with the Nature Conservancy on the 35,000 hectares of land.
That’s only the first asset, the fund will combine assets of varying types, with broadacre farming sitting alongside biodiversity and conservation projects.
“We’re taking all the learnings from our many years of looking at biodiverse assets, as well as farming assets, and bringing it all together, to make it easier, or less risky, for investors to come into the Forever fund.” Nigel says.
The Carbon Credit Model
A large part of the revenue supporting these projects comes from carbon credits earned from a range of different types of projects. It includes avoiding deforestation, or directly sequestering carbon in the soil. Farming also contributes, through soil carbon projects, and by reintroducing the ‘corridors’, they’re also rehabilitating remnant vegetation, which is all built around the carbon models.
“Essentially it’s recognition of the value of co-benefits in carbon, so that the biodiversity piece works extra as well with the carbon piece, wherever possible. That’s probably the ultimate goal.” Nigel says.
“We need to draw-down carbon out of the atmosphere, and we need to change the trajectory of biodiversity. We’ve got a downward spiral and biodiversity loss, and we’ve got an upward spiral of carbon into the atmosphere. So both of those need to work hand in hand. They’re complimentary, when you work with them both together.”
Targeting $100M with a Broader the Investor Base
From its early days, Tiverton was fortunate to have a dedicated investor-base that understood the challenges, and the risks, around what they were trying to do.
They were testing and experimenting, and while not everything worked, the successes and the lessons learned have culminated in the next generation of projects that they’re targeting with Sentient.
“We’re hoping that we can attract the broader investor, and ideally institutional investors. We never expected institutional investors would come into Tiverton in the early days because we had to trailblaze a lot of areas and trial new methodologies with different cropping types and different farming types to get to this point.” Nigel says.
“Now we can demonstrate what works. And we’re hoping to ultimately bring on institutional investors.”
The original Tiverton Agriculture Impact Fund grew to around $200 million, so it doesn’t appear to be a stretch for the next fund to keep up.
“We’d like to target $100 million at the start, and growth from there. We’ve identified some more properties. It was great to be able to buy the Sunnyside one while we could.” Nigel says.
“We’d like to see if we get to $200 million quite quickly, over the next couple of years.”
Synergies in Partnering with Sentient
Sentient have brought together the legacy skills and experience from the Impact Investment Group, and integrated numerous well-credentialed investment professionals. For Tiverton, it represents a ready-made team of professionals to handle the challenges of scale, and of running the logistics of integrating institutional investors.
“For us, the benefit is that we can stay very focused on the asset selection, asset performance, and that they can focus more on the capital side of things.” Nigel says.
“Ultimately, if we’re going to appeal to institutional investors, we need the governance and sophisticated investment issues to be covered off. We didn’t have the internal capacity to do that. We went through a number of discussions with Sentient, and we got very comfortable that they’d be a great partner for us, and for the Forever Fund.”