Bregal Investments, a private equity firm with five separate fund strategies, has added a sixth in the form of a natural capital impact strategy: Bregal Sphere Nature.
Bregal established the unit last year, when it appointed Alvar de Wolff, its former head of ESG and responsible investing and an influencer in private markets sustainability, to lead its push into impact. The firm has now hired Agustin Silvani, formerly head of conservation finance at Conservation International, to lead Sphere’s first strategy alongside de Wolff as joint managing partner. Silvani spent 14 years as chief investment officer of Conservation International Ventures, the NGO’s impact investing arm.
Speaking to New Private Markets, de Wolff said there is a nature financing gap that Bregal hopes to help fill: “If we want to achieve global climate and biodiversity goals, the private sector really needs to step up, and hopefully we can play a part in that. We believe we can take our rigorous private equity investment practices, such as origination, risk management and underwriting, and apply them to this nascent asset class.”
Bregal Sphere Nature will focus on long-term project investments within agricultural supply chains, such as coffee and cocoa agroforestry models. It will work with developers to finance regenerative agriculture projects with farmers and co-operatives, with a view to producing carbon credits. “The real potential here would be working to turn these supply chains from carbon sources into carbon sinks,” said Silvani.
De Wolff added: “The demand for these types of investments comes from corporates seeking to decarbonise their supply chain [as part of their net zero plans] and secondly to invest in making those supply chains more resilient for the long term because of changing climate. We also see institutional investors looking to allocate capital into nature and fund the transition to nature-positive supply chains.”
The firm declined to comment on fundraising plans, citing regulatory reasons.
Silvani sits on the board of the Integrity Council for Voluntary Carbon Markets, a body established to define and enforce quality in the supply of carbon credits. He believes that voluntary carbon markets are – like any other markets – going through “periods of change and evolution, which is a good thing”.
“I think we are at the start of ‘carbon markets 2.0’, in a way,” he said. “There are new rules, new standards, new scrutiny, new regulations. So the bar is essentially rising.”
Silvani added: “We are at the ‘tip of the spear’ in terms of showing what high-quality, high-integrity carbon markets look like. And that is why the focus is on supply chains, on insets: on quantifiable benefits; these are all aligned with where the market is going and [what] corporations need to be prioritising.”
The Bregal Sphere team is currently seven people, said de Wolff, but would look to get to a dozen by the end of the year. “In addition to impact investing talent, we are excited to hire people from NGOs: we recognise we need a diverse team with different skill sets to underwrite these projects, because of course you have the carbon and nature piece, but you also have the general financial analysis aspect to it.”