SAO PAULO (Reuters) -Brazilian reforestation startup re.green has obtained 80 million reais ($14.13 million) in financing from state development bank BNDES, it said on Monday, in a deal that also involved lender Bradesco as a financial intermediary.
The deal is similar to a 160 million real deal announced by Mombak last month, which marked the first reforestation project backed by Brazil’s 10 billion real “New Climate Fund” unveiled in 2023 to finance climate-related projects.
The deal comes as Brazil’s nascent carbon market quickly gains ground and attracts interest from private investors and lenders such as Bradesco and Santander, which acted as an intermediary for Mombak.
Some restoration startups have complained of difficulty getting loans to reduce capital costs and finance operations, as many investors still see it as risky.
“We have a mantra that is de-risking, which is how we will, over time, reduce uncertainty and bring more confidence to our market,” re.green Chief Executive Thiago Picolo said in an interview.
“In our case, we now have the first disbursement from BNDES, also involving Bradesco for the first time. So it is a series of steps that reduce uncertainty, increase confidence, and facilitate fundraising.”
Re.green buys degraded land from farmers and ranchers or partners with them to replant native species in the Amazon rainforest and in Brazil’s coastal Atlantic rainforest.
By turning degraded land into forests, the company is working to generate “carbon credits” that companies can buy to offset their greenhouse gas emissions.
The startup has a deal with Microsoft to restore forests and is backed by Brazilian billionaire Joao Moreira Salles and asset managers such as Dynamo and Gavea, founded by former Brazilian central bank governor Arminio Fraga.
The BNDES financing “shows that we have a powerful tool to enable investments in the recovery of degraded areas in the country,” said the state development bank’s head, Aloizio Mercadante.
“It confirms the great power of this fund made available by President Luiz Inacio Lula da Silva for BNDES to decisively fight the effects of climate change in our country,” he added.
The bank’s program is part of Brazil’s 2015 commitment to restoring 12 million hectares (29.7 million acres) of its native forests by 2030, which Lula reaffirmed last year.
($1 = 5.6632 reais)
(Reporting by Gabriel AraujoEditing by Bill Berkrot)
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