Terraformation targets $100 mln for early stage forestry fund

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FILE PHOTO - Oak trees are pictured in Chateauroux forest near Ardentes, central France, days after a massive fire devastated the roof's wooden beam structure of the gothic Paris' Notre-Dame Cathedral, April 19, 2019. REUTERS/Regis Duvignau

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  • Fund to blend public, private investment
  • Seed supply, forester shortage, verification seen as key

LONDON, March 3 (Reuters) - Terraformation, a forest restoration start-up founded by the former boss of technology company Reddit, is looking to raise $100 million for a fund focused on early-stage projects in developing countries.

The as-yet unnamed fund will blend private, public and concessional capital in a mix of equity and debt, it said, and aims to launch later this year.

In the week U.N. climate scientists warned of the escalating impact of climate change, Terraformation and non-profit Bankers without Boundaries, which is helping structure the fund, said restoring 2.3 billion acres of forest could cost $2.6 trillion. read more

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"To solve climate change, the world needs to turn trillions of dollars into forest in the next eight years. Despite increasing demand from investors, the financial products don't yet exist to put that money to work at scale," said Terraformation founder and Chief Executive Yishan Wong.

In a co-authored report, the partners said grants, guarantees, asset-backed securities, collateralised loan obligations, sustainability-linked credit and green, social and forest bonds could all be used to scale up forest finance.

More than 100 leaders pledged to stop and reverse deforestation at global climate talks in November, yet Terraformation said a "new wave of innovation" was needed in financing of projects to make it happen. read more

The partners said they aim to address hurdles to reforestation, including a lack of seeds and trained foresters, concern over the rigour of checks, and a shortage of cash, in order to cut risk and attract investors.

"Forest finance is one of the next frontiers for innovation in financial services," said Rupesh Madlani at Bankers without Boundaries, which normally help governments and institutions with financial advice on social and environmental projects.

"But it’s clear that a step-change in both thinking and action is required. This is a global issue and it needs a global answer."

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Reporting by Simon Jessop; Editing by Jan Harvey

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