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 30th November (extended from 1st November because of growing funding opportunities and bandwidth constraints in our team). We are most grateful to UKIB 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 three main ways to pay the loans back, operating in parallel. The first involves the equity raise. The second entails bond financing. The third involves land sales for lease-back to Highlands Rewilding: a model we have named Nature and Community In Perpetuity (NCIP).
Our equity fundraising round includes multiple potential investors, and new prospects are joining discussions late in the round. 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, we have discussions underway with financial institutions keen in principle to provide us with a bond. (A bond is long-term low-interest debt finance, quite unlike the short-term high-interest lending we took out with which to buy the Tayvallich Estate).
On top of these two (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. As thing stand the proximity of the loan expiry means they have had very little notice, but as soon as we land either sufficient equity, or bond financing, or both, we will be able to extend the period in which our communities can try to raise finance, should they vote so to do.
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 that we find no equity, no bond finance, and no NCIP buyers for land on sale, 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, making no profit. 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 are also in process of selling three of our tenants their homes, making no profit,.
We are optimistic that we will succeed in raising the equity, bond finance and land sales which embed nature and community in perpetuity, enabling the breakthrough we so badly 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).