Q and A on Highlands Rewilding’s current state of play

The purpose of Highlands Rewilding Ltd (HRL) is “nature recovery and community prosperity through rewilding taken to scale.” That cannot be done without financial institutions such as pension funds investing extremely large sums, which hasn’t happened yet. According to one estimate, national nature recovery in Scotland – a particularly nature-depleted nation – would require nationwide investment of £20 billion by 2030. We are not even in the foothills of that Everest of a goal, and Highlands Rewilding is hoping to attract the first financial institutions into the foothills.

Our core reasoning was that whilst we already had a good spread of habitats in which to conduct our natural-capital verification science on the Bunloit and Beldorney estates, the addition of the rich collage of habitats on Tayvallich – plus offshore along the 40km of coastline – we add game-changing attractions to our portfolio and proposition.

In addition, we had reason to be hopeful of being able to use innovations in finance such as the blending of private and philanthropic capital.

We always knew our plan was risky, and we always knew we would have to pay the loan back, and because it was a 12 month bridging loan. The Board of Highlands Rewilding took the decision to take out the loan. But we did so after checking the opinions of 18 of our 53 founding funders, those with the most high-level business experience. Almost all of these experienced advisors agreed we should go ahead. The common feeling was that global biodiversity collapse is an existential threat for humankind in which the clock is ticking loudly, meaning Highlands Rewilding should try its hardest, in short order, to break through to scale in the nature-recovery market needed for a liveable future.

Yes, it was the right thing to do. There are three main reasons for this, as things stand.

First, we currently have 27 conversations underway with potential big investors, and it is clear this wouldn’t have happened without the loan. This is because Tayvallich Estate is uniquely fit for community-centred nature-restoration purpose. With two months to go before the equity round closes (1st November) we can be reasonably hopeful of landing the few investors we would need from those 27, and any others who may join them in the endgame. We are grateful to the UK Infrastructure Bank and TopOnline partners, our lenders, for giving us the chance to bring the first private financial institution across the line.

Second, because of the emergence of what we call the Nature and Community in Perpetuity mode (NCIP). This is a unique model that guarantees a large tract of land will be used only for the community-centred nature recovery, essentially forever. 1,300 acres (530 hectares) of Tayvallich Estate are now locked up for this purpose, come what may.

Third, because of the company–community relationship in Tayvallich, as captured in the goodwill agreement of the Memorandum of Understanding (MoU) that Highlands Rewilding and Tayvallich Initiative have signed. The MoU has been welcomed widely across the country as a pioneering development in landowner–community relations. We are now looking to replicate this with a draft in discussion with the local community at Bunloit.

We emphasise that this is the tally of successes as things stand. If we succeed in our equity round, as we fully intend to do, many other successes become possible.

True, and this adds difficulty to our task. But the market is beginning to move. Recently a pension fund invested in a company very interested in investing in us, and a major utility decided to sell biodiversity credits on land where it is developing infrastructure, ahead of market rules being decided by the Scottish Government. In addition, most of the potential investors talking to us have heads of nature investment, some of them recently appointed. Clearly the expectation in the financial services industry is that it is a question of when, not if, the nature-recovery market takes off.

We have four options. The first is to succeed with the equity round. If we can do that by end October, we pay off the debt and have working capital for scaling. Our current skeleton crews on three estates will become full teams, and we can press on with the projects we have in planning jointly with communities. The time constraints arising from the loan payback date evaporate.

The second is land sales that replicate the sale of 1,300 acres of Tayvallich to the Barrahormid Trust under the Nature and Community In Perpetuity (NCIP) model. If we can find more Barrahormid Trusts we will be scaling a unique model that locks land up for community-centric nature recovery, at ever growing scale, essentially forever. This isn’t an either/or with the equity round – we can do both, in principle, and indeed are minded so to do.

The third involves partnering with landowners who do not want to copy the whole Barrahormid-type arrangement, but who do want to partner with Highlands Rewilding as land manager, for a win–win share of natural capital proceeds. We call this our Operating System Partnerships for Rewilding (OSPREY) model.

The fourth involves the hopefully unlikely eventuality of all the above failing, and HRL having to sell to buyers who do not want to partner with the company and might not have the same consideration for communities. We understand that would be concerning for the communities where we work. But in this case, as with the previous options, we will apply Rural Housing Burdens on tenanted properties at sale with a covenant that each property will be used as a primary residence. This will leave a legacy locked in to the properties that reactivates generation after generation.

We haven’t said they are “on the point” of investing, and have always sought to be clear that such investment would be a first, and a challenge for us to bring about. HRL is in round 3 of its fundraising with a business plan that took months of careful preparation and was ready only in June 2024. It takes time to persuade investors, and August is essentially a dead month. The end of October is the deadline for offers because if we are successful with offers at that point a few more months would be needed for legals to be completed and funds to be received.

It entails a buyer of Highlands Rewilding land forming a charity that pledges community-centred nature-recovery in-perpetuity mission. Highlands Rewilding then manages the land to ensure this happens, under a long-term lease, sharing proceeds from natural-capital monetisation with the charity. The land in question, in the first such project ever, was on Tayvallich Estate in Argyll, and the buyer was the Barrahormid Trust. It was an idea put to Highlands Rewilding by a family office that founded the Trust. The company jumped at it, and quickly came to see its wider power.

In an NCIP relationship, HRL would appraise the land for nature-recovery potential and local-community engagement potential. HRL then conducts baseline surveys with a mix of approaches and technologies to be agreed with the land owner. Centred around the baselining, HRL draws up a holistic land-management plan for discussion and agreement with the land owner. HRL then executes the land-management plan, covering agreed operating costs. (This depends on a degree of success in its equity round, but well short of the full UK target of £25 million.)

The full form of the acronym hopefully tells the story: Operating System Partnerships for Rewilding. Highlands Rewilding Ltd (HRL) would manage the land, for a landowner not wanting to copy the Barrahormid Trust, using the operating system it has developed on three estates since it started up in 2020.

HRL would appraise the land for nature-recovery potential and local-community engagement potential. HRL would then conduct baseline surveys with a mix of approaches and technologies to be agreed with the land owner. Centred around the baselining, HRL draws up a holistic land-management plan for discussion and agreement with the land owner. HRL then executes the land-management plan, covering agreed operating costs. (This depends on a degree of success in its equity round.)

HRL and the buyer then share the net proceeds from the management of the estate in a win–win ratio, ideally the same as in the NCIP exemplar on Tayvallich.

Highlands Rewilding Ltd (HRL) borrowed £12 million in May 2022 as a short-term bridging loan over a 12-month period to finance the purchase of Tayvallich estate. Some refinancing means that the debt is now owed to UKIB and Top Online Partners, and £11 million of debt remains. Thanks to an extension, the loan has to be repaid by the end of January 2025. This means we have until the end of October for raising equity. If we do that, the time pressure inherent in the loan repayment evaporates. If not, the next deadline is 10th December for land-sale offers, whether under NCIP, or OSPREY, or others. This is to give time for money to be paid into the bank accounts of the lenders by end January.

The sale of the Barrahormid lot to the Barrahormid Trust raised £3.2 million. We have also sold land at Turbiskill to the Tayvallich community to build affordable homes, which raised £420,000. As of the end of January the debt will stand at £11 million.

We have had discussions with potential lenders who have expressed interest in supporting the working capital requirements of the company going forward once we have has received additional equity funding in its current round.  While the business has steady income streams from environmental tourism and livestock farming, these are insufficient on their own to support a restructuring of the current debt, and the ongoing lack of progress with biodiversity markets in Scotland requires further equity as the only funding solution in the short/medium term.

We had envisaged having faster progress on the current equity round that would allow us to repay the existing debt, and at that point initiate discussions with local communities to investigate the possibility of community land purchase within an extended time frame, free from the company’s current debt security obligations.  The slower-than-hoped-for progress with the equity round has required the directors to prioritise the loan repayment timeline and fit other discussions around that.

If Highlands Rewilding cannot manage to raise any equity at all, much of the three HRL estates (Tayvallich, Bunloit and Beldorney) would have to be sold in order to meet the £11 million debt repayment. But if sufficient equity is raised, HRL would like to own South Bunloit and on Tayvallich, Coshandrochaid plus the lots to the west of Linne Mhuirich.

We will give preference to local communities wanting to buy the plots of land we are offering so long as are able to fulfil our obligations to our 809 shareholders. We have three priority categories of land-sale, and our local communities come first in all of them. Note that HRL can choose who it sells to; it doesn’t necessarily need to sell to the highest bidder.

Priority One: Land sales to buyers prepared to guarantee nature recovery and community prosperity in perpetuity, with Highlands Rewilding partnered as land manager, sharing natural capital proceeds (the Nature Recovery and Community In Perpetuity, or NCIP model, of which the Barrahormid Trust is an exemplar).

Priority Two: Land sales to buyers not prepared to give that guarantee, but wanting to partner with Highlands Rewilding as land manager, sharing natural capital proceeds. (Highlands Rewilding calls this its OSPREY model: Operating System Partnerships for Rewilding: see explanation above).

Priority Three: In the event that the company is forced to sell land to entities not interested in either of the above, in order to repay debt, local communities still get first refusal as buyers. Also, in this case, as with the previous priorities, we will apply Rural Housing Burdens on each tenanted property at sale with a covenant that each property will be used as a primary residence. This will leave a legacy locked in to the properties that reactivates generation after generation.

The reason we have three priority categories is because the company has to operate with shareholder interests and community interests in balance. Highlands Rewilding Ltd was set up in 2020 with the purpose of "nature recovery and community prosperity through rewilding taken to scale". This is underpinned by a promise to its multiple shareholders to try to achieve this via an ethical level of profitability over ten years, on the premise that profitable nature-recovery will be essential if biodiversity collapse is to be reversed.

Highlands Rewilding is a company that needs to consider two types of community: Community of Place and Community of Interest. Our three Communities of Place number 3,600: 300 in Tayvallich, 300 in Haugh of Glass (in which the Beldorney estate sits) and 3,000 in Glen Urquhart (in which the Bunloit estate sits). Our Community of Interest is our shareholders, all of whom, by definition, believe in the purpose of Highlands Rewilding. They number 809. There is overlap between the two, with nearly 5% of our shareholders living in our communities, and most of our staff too. The company is essentially a creature of those communities, and will increasingly be so as time goes by.

No, we are trying to create a balance of obligations, within two categories of priority which places the Nature and Community In Perpetuity model ahead of the category that involves land-management partnership without an “in perpetuity” element.

For communities, we are hoping that the “in perpetuity” element of the NCIP model will appeal because it safeguards against any shift away from the core purpose of community-centred nature-recovery. For example, it would stop any caucus potentially forming in a community of the future that might wish to sell land to a golf-course developer. We are hoping that a lease with Highlands Rewilding will be attractive because most of our teams consist of people living on or near the estates we manage. Their deep and varied skill sets will be known to the communities, their jobs are created by the company.

Additionally, communities would always be able to take the lease away from Highlands Rewilding if we fail to perform well in our community-centred land-management role, just as the Barrahormid Trust can under the Barrahormid lease. (But given the demonstrably deep and broad skill sets of our local employees to,  we believe we are the best current option for land management of these areas).

It is certainly not the only model, but we seek ethical levels of profit for three key reasons. First, many billions of £s will be needed if nature recovery is ever to scale nationwide, as it must if biodiversity collapse is to be reversed. Second, this will mostly have to be patient capital from private financial institutions such as pension funds. Third, for-profit nature-recovery companies have the best chance of attracting that capital, and they will need to be successful and fast growing. If these three premises are accepted (and we understand that there are many who do accept them), then Highlands Rewilding has a case for being a front runner, worthy of support.

Investment experts believe it will be difficult-to-impossible to inject the many billions of £s of investment into community-centred nature recovery, other than through models which seek ethical levels of profit.

Looking to the future, Highlands Rewilding will essentially be a company not just staffed from within its local communities, but probably run by leading lights from those communities. And crucially, if it grows to be as big as it could and will have to - if it is to be an industry leader - it will be bringing hundreds of millions of £s into the communities that would have been difficult-to-impossible to raise any other way. This will come from investment into the company, shares of natural-capital monetisation with the company, and joint-venture companies between company and community of the kind currently being investigated in the FIRNS project.

But first, the company has to survive today. And to do that it has to get the balance right between its obligations to its communities and its shareholders. If we downplay the shareholders, then financial institutions, mission congruent family office and companies will not invest, and HRL will go under.

We recognise a gold standard of full community ownership and control, and that we are not it. But if you accept the premise that community-centred nature recovery on a national scale will require investment by private financial institutions in the multiple billions, then we argue that – today – “silver-standard” organisations are in a much better place to start that process. To invest, they will need for-profit models capable of generating returns acceptable to their pension holders and shareholders. They will look to governance that is deeply experienced in the business world. Highlands Rewilding can deliver those things. Much as we agree it is critical the gold standard of community ownership becomes part of the norm, we do not believe the conditions yet exist for such models to attract investment on the scale needed. It is hoped in time they will do so.

Our argument goes further. We see a roadmap that can lead from the silver standard to the gold standard.

With investment from private finance institutions HRL will be able to grow fast, fuelled by the working capital we need. That means we will be able hire fast, because nature recovery is labour intensive.  We will continue to hire local, and as we provide more jobs we become more grounded in the local communities where we work.

Highlands Rewilding and other nature-recovery companies like it have become “investable”, and a deep pool of highly skilled nature-focused labour emerges.

Community organisations now have access to the range of skills, and understand the business models nature recovery companies returning 10-11% IRR deploy, because of the pioneering work of the silver-standard companies. Private financial institutions find it easier to invest in local enterprises, because they have become familiar with the market, operational models, and workforce they are investing in.

And so the tens of millions, and then the hundreds of millions, begin flowing direct to gold-standard organisations.

We will have achieved our purpose of community-centred nature recovery taken to scale. HRL will have succeeded as an intervention appropriate to its time and could wind down and hand over to others to continue to build a vibrant nature-led rural economy. But more likely, we will have become a global powerhouse in natural-capital data and land-management for rewilding and community prosperity along the way. We no longer own much land, or even any. We are a standard-bearer for a new Scottish export industry in data-led nature and community prosperity services.

But for this roadmap, and dream, to have a chance of success, we absolutely must be investable today, as we have argued in the answer to Q14.

That depends on how Highlands Rewilding does in the equity round. If we are at due diligence stage with financial institutions before the close of the round end October, lenders might allow this. They have already extended the loan on two occasions.

The 6 months will kick in if Highlands Rewilding raises sufficient equity. If not, because of the imperative of debt repayment, regrettably the community would have the same timeline as everyone else: bids in by 10th December. With the benefit of hindsight, we should have suggested the community consider an offer for the land earlier, but we were expecting that we would be able to restructure the debt.

No. Strutt and Parker fully understand that we have a hierarchy of preferences among buyers, and the reasons for those preferences. The brochures we are putting out with them, which will be made public on 1st October, include explanations of the NCIP and OSPREY models and our preference for buyers agreeing to them.

We are partnering with Strutt and Parker because they will help us cast our net wider for buyers willing to partner with us on managing the land for nature recovery and community prosperity, whether under the Nature and Community In Prosperity model or not. Plus of course, we would have a backstop of potential buyers if we fail to raise equity and find buyers of our preference.

They have for upland areas, but prices for estates like HRL’s – which all include beautiful countryside – have been stable.

Under the MoU (https://tinyurl.com/MOU-between-HRL-and-TI), some objectives are secondary to repayment of the UKIB loan, whereas some are independent of the loan. The MoU is not legally binding since it’s not possible to set all of the objectives into law, but the progress in fulfilling certain objectives have moved them to a legal standing (e.g. the sale of Turbiskill to Tayvallich Initiative), and some other objectives have already been fulfilled during HRL’s ownership of Tayvallich Estate (e.g. maintaining the number of employed positions on Tayvallich Estate, and in fact increasing that number, and establishing the Tayvallich Estate Local Management Board). The MoU is therefore a goodwill hand-shake agreement or gentlemen's agreement, and it has been welcomed widely across the country as a pioneering development in landowner–community relations.

Yes, they have already been offered, at fair valuation. These will be sold with Rural Housing Burdens attached, and the RHB reactivates at any subsequent sale to safeguard properties in perpetuity as a key device to promote community prosperity. The RHB includes a covenant for the property to be used as a primary residence. It would be a positive news story to announce the first RHBs applied in the Tayvallich area.

The MoU would be applied to any NCIP partners since this is already in place for Barrahormid Trust and the same template will be used. HRL would request the MoU be applied to any owners with an OSPREY agreement. Purchasers on the open market would also be encouraged to adopt the MoU.

£4.25 million. This is based on the independent valuation Galbraith provides us for our accounts. The valuation was completed in May 2024. Values will not have changed very much since, and anyway we don’t have the luxury of time for a new valuation, should we fail to raise enough equity.

We are finalising details. Brochures will be ready to go on 1st October.

Yes, we have started, and we are making it clear that first offer is to the communities where we work. We are hoping we will find that the NCIP model will prove to be very popular, both with communities and family offices alike. For family offices, we are hoping the element of legacy will be very attractive: to have a place future generations can visit, maybe even live in, and watch – for example – the temperate rainforest return, and the relationship with a community deepen over time.

Yes, this would be a condition of any sale under the NCIP model. It will be a question of simply copying the Barrahormid Trust examplar.

We imagine NCIP and OSPREY buyers would be the kind of people who would actively want to meet and get to know the community

While it is challenging to put in place absolute safeguards, Highlands Rewilding is actively pursuing a number of mechanisms for embedding community involvement and benefit. The first is our Buyers charter which includes provision of community involvement and benefit.  The second is the inclusion within the articles of any new Trust a commitment to community prosperity, and the third is specific objectives and commitments made within the lease back agreement with HRL. These provide the opportunity for discussion and agreement between buyers and local communities which HRL would look to support.

No. We have done the best we can with the equity we raised when we started up. On Bunloit, we have added 5 jobs, and 4 staff working across all three estates live on or near the estate. On Beldorney we have kept 3 jobs and added 1. On Tayvallich we have kept 3 jobs and added 2. Essentially, we operate skeleton crews on all three estates, and in the pan-company team. We hope to correct that, given success in our current equity round.

We say this is incorrect. No shareholder in Highlands Rewilding owns more than 12% of the company at present, and the company is governed by a hugely experienced board, to which JL as CEO answers. So he cannot reasonably be described as a Laird. This is vastly different to the ownership pattern on most estates in Scotland. 

We have not been reckless. The answers to questions above demonstrate that what we have done is take calculated risks, motivated by existential threats to the planet, with the full blessing of many experienced shareholders and lenders. 

We are not in any way speculating in land. We are trying to sell land, making no profit, so that it can be locked up for community-centred nature recovery, essentially forever. That represents a considerable prize, for those who care about the economic and demographic threats to rural communities, and the collapse of biodiversity and its life-support role.

Martin Mellor, chair of Tayvallich Initiative (TI), expressed the community’s appreciation that HRL were sharing their plans at this stage, acknowledging the openness and transparency of HRL with the community both now and over the last months. MM stated that the community is in a very different position from two years ago because (1) Barrahormid Trust has been established and has bought a large part of Tayvallich Estate, (2) TI has bought Turbiskill as community-owned land with a tenanted house, plus TI owns Polldearg and a tenanted house there, (3) the MoU between HRL and TI has been widely lauded as a pioneering handshake agreement, reflecting many of the community’s desired actions that were expressed and discussed over the last two years, (4) HRL have set up a local management board with community representation, and (5) HRL as a company and landowner focused on “nature restoration and community prosperity through rewilding taken to scale” is actively talking with the community.

There was considerable concern about the timings that HRL are working within, and that contingency planning is necessary. In conversations after the meeting, there were many expressions of hope that HRL can succeed in its equity round and wishes of good luck in that task.

We have written to community leaders explaining the timeframe currently facing us, and asking whether – notwithstanding the short period for offering of bids – they might wish to try. We have offered to hold public meetings to answer questions, as we did in the Tayvallich community at the end of August.