August 5, 2024

By Gerelyn Terzo, Global AgInvesting Media

In its maiden engagement with an institutional timberland investment manager, the International Finance Corporation (IFC), a World Bank Group division, has committed $50 million to jumpstart BTG Pactual’s Timberland Investment Group (TIG) Latin American reforestation strategy. The announcement was made at a signing ceremony in São Paulo, Brazil, where the proceeds will be directed, and attended by Alfonso García Mora, IFC vice president for Europe, Latin America and the Caribbean, and Roberto Sallouti, BTG Pactual CEO.

Through the commitment, which comes on the heels of a recent $50 million commitment by the U.S. International Development Finance Corporation (DFC), the partners are targeting the production of carbon credits through nature-based solutions, the reduction of emissions, and improvements to sustainable forest management standards in Brazil. Among the benefits are job creation and economic opportunities in rural communities. The IFC’s García Mora tweeted, “This is more than an investment—we’re growing a greener future and fostering community prosperity.”

Upon meeting predefined biodiversity and watershed health targets, BTG Pactual’s TIG unleashes greater financial outcomes for its strategy from the IFC commitment. These criteria involve the addition of “connectivity corridors for plants and animals, and buffers along streams and rivers that can help provide ecosystem services for natural water infrastructure,” according to the announcement.

BTG Pactual TIG boasts $7.1 billion in AUM across roughly 3 million acres under management. The firm’s reforestation strategy comprises the “the conservation, restoration and planting of deforested and degraded properties in selected regions in Latin America” featuring Brazil’s Cerrado biome, one of the most biodiverse and seasonally dry ecosystems on the planet, per the announcement.

TIG’s investment strategy is two-pronged, targeting projects that support sustainable tree farms one one hand and the protection and restoration of native ecosystems on the other, with a view to add “protection and restoration of important habitats with sustainable commercial production” to deforested and degraded land.

The IFC’s García Mora stated: “Driving ecosystem restoration is a critical step to building a sustainable future. Working with BTG Pactual TIG will enable us to leverage our expertise, experience and global reach to promote environmental and social sustainability in Brazil. For us at IFC, this is beyond investment – we are advancing the potential of a livable planet for all in line with our global strategy.”

BTG Pactual’s Sallouti said: “We are thrilled to announce IFC’s commitment to TIG’s strategy, that not only enables us to pursue impactful outcomes on the ground, but also supports the fundamental business case for large-scale nature-based solutions. Together, we can drive transformative change, targeting significant climate, biodiversity and community benefits across Brazil and other Latin American countries.”

Separately, funds overseen by TIG have divested approximately 70,000 hectares from their core Latin America timberland strategy, which targets mature, sustainable timberland assets, to pulp manufacturer Suzano in a blockbuster BRL 2.1 billion (US$366.9 million) transaction, one of the biggest timberland deals in Brazil’s history. Located in the Brazilian state of Mato Grosso do Sul, the timberland assets include 50,000 hectares of productive area, which TIG expects will continue to be sustainably developed by Suzano.

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