Baar-Zug, Switzerland, 8 October 2019
PG Impact Investments, a global impact investment firm, invested in the inaugural transaction of the Tropical Landscapes Finance Facility I (TLFF I), which has issued notes to finance a USD 95 million loan to a sustainable natural rubber plantation operator in Indonesia.
TLFF I was structured using blended finance, with USAID providing a partial credit guarantee to the transaction, which funds PT Royal Lestari Utama (RLU). This innovative approach is expected to result in differentiated social and environmental impact. Funding is anticipated to create upwards of 16,000 fair-wage jobs while simultaneously equipping local smallholder farmers with the tools necessary to increase natural rubber production in an efficient and sustainable manner.
Much of the RLU concession area was previously degraded as a result of illegal encroachment. To help protect the remaining forested areas, the project involves a collaboration with WWF, which has worked with the company since it was established in 2015. RLU has committed to setting aside more than half the 88,000 hectares of concessions in Jambi and East Kalimantan for community livelihoods and conservation.
RLU’s rubber plantations benefit from technical assistance and an off-take agreement from shareholder, Michelin. Furthermore, RLU’s plantations in Jambi and a 9,700 ha Wildlife Conservation Area developed with WWF will also provide an important buffer zone to protect the southern border of the important 143,000 ha Bukit Tigapuluh National Park (BTNP) from encroachment. The national park contains Sumatran elephants, tigers and other endangered species.
Urs Baumann, CEO of PG Impact Investments, stated: “We couldn’t be happier to partner with TLFF I and be a part of this mission. We are impressed by the unique, blended finance structure of the deal and the way in which it is expected to maximize both financial as well as social and environmental returns. The impact story associated with TLFF I is truly compelling and we are glad to extend our reach to the underserved communities living on and bordering the plantations in Jambi and East Kalimantan.”
Lisa Genasci, CEO of ADM Capital Foundation, which with investment manager ADM Capital is a founding partner of TLFF, stated: “We’re excited to have a long-term partnership with an investment firm like PG Impact Investments, who we know are dedicated to implementing tangible social and environmental change.”
About PG Impact Investments
PG Impact Investments was founded in 2015 with the vision that private investment, innovation and entrepreneurial talent can provide solutions to the challenges faced by our society, as well as create sustainable growth. PG Impact Investments is a private sector, mission-driven, global investment firm specializing in investment solutions aimed at delivering financial returns as well as creating a positive social and/or environmental impact. It manages investment strategies for an international clientele of professional investors who are seeking investment solutions that offer market-rate returns, while also helping to address pressing social or environmental challenges. All profits from the business activities of PG Impact Investments are transferred to PG Impact Investments Foundation. The Foundation supports social initiatives and social businesses ventures that otherwise would not receive funding through commercial investors or investment funds. Whilst being independent from Partners Group, PG Impact Investments entities are backed by Partners Group and its employees and benefit from the global infrastructure, investment know-how and specialist resources of this leading global private markets investment manager.
About Tropical Landscapes Finance Facility
TLFF, a partnership between UN Environment, World Agroforestry Centre (ICRAF), ADM Capital/ADM Capital Foundation and BNP Paribas aims to bring long-term finance to projects and companies that stimulate green growth and improve rural livelihoods in Indonesia. TLFF consists of a lending facility managed by ADM Capital with BNP Paribas as structuring adviser and arranger.