Mitsui & Co invests in Adamantem Capital’s Climate Friendly

The deal will help Climate Friendly ‘accelerate delivery on its purpose’, Adamantem Capital says, with the firm rapidly growing since an initial 2021 investment.

Japanese conglomerate Mitsui & Co has taken a minority stake in Australian carbon farming services provider Climate Friendly, joining majority investor Adamantem Capital.

The investors said in a statement that the investment would help Climate Friendly continue to scale up its carbon farming efforts, and that Mitsui had recognised the “quality and growth potential of the Australian carbon market”.

The terms of the deal were not disclosed but affiliate title Agri Investor understands that Mitsui has acquired a roughly one-third stake in the business.

Adamantem Capital, an Australian private equity firm, first invested in Climate Friendly in early 2021, the first investment to close from the firm’s second fund, which the Clean Energy Finance Corporation and Aware Super each made separate commitments of A$80 million ($55.1 million; €52.5 million) to as anchor investors in 2020.

Adamantem Capital Fund II was billed as the first Australian private equity fund to adopt a “cradle to grave” approach to the emissions impact of its assets, and the cornerstone commitment also represented the CEFC’s first investment in private equity. All the companies that the fund acquires are required to implement emissions reduction targets that aim to either eliminate or offset their emissions within a decade.

Climate Friendly was established in 2003 and is a consultancy that works with farmers, traditional custodians and conservation organisations to adopt land management practices proven to reduce carbon emissions. The firm has “rapidly scaled up” since Adamantem’s investment last year, it said. Its founders and management still retain a minority equity stake in the business.

Georgina Varley, director at Adamantem Capital, said in a statement: “Mitsui’s investment is a recognition of Climate Friendly’s progress and its leading position in carbon farming development in Australia.

“As a majority partner, Adamantem is committed to support Climate Friendly as it continues to grow, innovate and help transform the industry. Together with Mitsui, we can support Climate Friendly as it accelerates delivery on its purpose.”

In a separate statement, Mitsui & Co said: “[Carbon Friendly] had already achieved 20 million tons of greenhouse gas reduction by 2020, and is aiming to achieve a 100 million ton cumulative greenhouse gas reduction by 2025. The land-based carbon projects supported by Climate Friendly are expected to play an important role in achieving the Australian government’s greenhouse gas reduction target, by absorbing and sequestering CO2 from the atmosphere, and also improving soil quality and drought resilience and preserving ecosystems.

“Demand for emission reduction credits from the voluntary private sector has been growing, and is expected to continue to grow steadily. Australia is one of the most important countries for Mitsui business, and we will proactively work to reduce the greenhouse gas footprint of our group companies as part of our decarbonisation strategy.”

Mitsui said it has set “energy solutions” as a strategic focus area in its Medium-term Management Plan 2023, with carbon credits part of its approach alongside other avenues such as clean hydrogen and carbon capture and storage.

Adamantem Capital and Climate Friendly declined to comment further beyond their official statements.

Mitsui last year partnered with New Forests to launch a carbon offset fund worth approximately A$50 million.

Mitsui said at the time that it “aims to combine this low-carbon investment with its forestry expertise and contribute to achieving net-zero emissions of Mitsui group and its business partners by 2050”.