A Highlands Rewilding update on progress
Highlands Rewilding is a 4-year-old company with the purpose of nature recovery and community prosperity through rewilding taken to scale. We have begun the process by acquiring three estates in Scotland, on which we employ many local people. We are managing in pursuit of ethical profits sufficient to attract the first private financial institutions to begin investing, so that we can help Scotland hit its necessarily ambitious targets of stopping biodiversity collapse, and reversing it. We have been helped by a public Financial Institution in that mission, the UK Infrastructure Bank. They gave us a £12m loan - their first-ever nature investment - with which to buy our third estate, paving the way for 30 conversations in an equity round we have underway, closing 1st November. We are most grateful to them for giving us this chance to break through on the frontier and bring the first private FI into the market.
The three estates are currently valued at £14.9 million by Galbraith. We still owe £11m to our lenders. This is due at the end of January, as things stand. We have two main ways to pay the loans back, operating in parallel. The first involves the equity raise. The second entails land sales for lease-back to Highlands Rewilding: a model we have named Nature and Community In Perpetuity (NCIP).
Our equity fundraising round includes 21 private FIs, 5 family offices and 4 companies. We are seeking £25m for scaling in the UK (we raised £11m equity in our two earlier rounds). We have a real chance of attracting the first of the private capital that the Scottish Government wishes to support, building on schemes such as the Market Framework Advisory Group of which Jeremy Leggett, Highlands Rewilding’s CEO, is a member. Nonetheless the policy framework for nature recovery is still widely seen in the financial sector as too weak and far off and so success is not guaranteed.
In parallel (and not as an either/or) we have the effort to replicate our first NCIP deal from earlier in the summer, as covered by The Scotsman: Scottish villagers sign landmark deal with rewilding firm to create new community homes and boost nature. Our target investors tell us they like the NCIP model, because they tend to prefer an asset-lite and data-rich model for Highlands Rewilding. The model has also seen support in the communities wherein we are rooted, because it guarantees community-centred nature recovery in perpetuity.
That is why we have recently put three plots of land on the market privately (public from 1st October, partnered with Strutt and Parker), looking for buyers to adopt the NCIP model. The total value of these is £11.1 million. That leaves £3.8 million of Highlands Rewilding land not yet on the market, which we intend to keep as home "laboratories" for the company - in addition to the NCIP land we manage with our local workforces (which are almost all hired from within the local communities). This includes South Bunloit and Mid Tayvallich.
We are offering our communities first refusal in NCIP deals, consistent with our purpose. Unfortunately the proximity of the loan expiry means they have had very little notice. Until recently, we planned to extend the timeframe via loan restructuring and raising equity, but a shift in the direction of the equity markets given slow progress towards national commitments for nature restoration have made this less likely.
We have heard interest from a number of the potential equity investors in our round in partnering with us to manage land they would acquire for nature recovery. We call this approach our OSPREY model (Operating System Partnerships in Rewilding). If all these partnerships went ahead and we achieved the equity anticipated, Highlands Rewilding would be set for breakthrough, and good growth, job creation and the community prosperity where we work.
In the (low-probability) worst case scenario, we find no NCIP buyers, all OSPREY discussions end in red lights, and none of our 30 equity conversations work out. Then we would be forced to sell land on the open market, in order to pay off our £11m of debt. We would still have locked around half the Tayvallich estate into community-centred nature recovery essentially forever, via our first NCIP deal. We have also sold a 10 ha plot to the local community, at cost, for an affordable housing project that is their very top priority. We would work towards similar agreements in other places should we succeed.
We are optimistic that we will succeed in raising the equity and securing land sales which embed nature and community in perpetuity, enabling the breakthrough we so need for people, nature and climate. We will continue to post updates on our progress as it evolves (please see our regularly updated Q&A here).