Farming and food the next green bonanza: Wollemi Capital

Climate-focused investment firm Wollemi Capital is betting that agriculture and food are among the industries next in line to be transformed by lowering their carbon footprint, after raising $220 million in fresh capital.

Wollemi, co-founded by former senior Macquarie Group executive Tim Bishop, said on Monday it had finalised a Series A raising for the company, after demand to invest more than doubled the company’s initial target.

Paul Hunyor (left) and Tim Bishop, co-founders of Wollemi Capital. Credit: Renee Nowytarger

The raising – which included an equity investment from the Commonwealth Bank – comes as big investors such as super funds are keen to fund decarbonisation projects, eyeing off the potential long-term returns. Wollemi will use the funds to expand the company’s operations and to help fund its pipeline of green investments.

Bishop signalled the company was targeting projects where it believed it could make investments that banks would not be prepared to finance – and farming and food were high on its list of priorities.

‘Within the climate space, we believe there’s a rapidly emerging investment thesis that we find exciting around food, agriculture and natural capital.’

Tim Bishop, Wollemi co-founder and former Macquarie Group executive

“Within the climate space, we believe there’s a rapidly emerging investment thesis that we find exciting around food, agriculture and natural capital, and some of the specific sleeves of the energy transition,” Bishop said.

“Part of the role that we are playing is to be a bridge to bankability. The investments that we are looking at might be too early for a bank, too early for an infrastructure fund, but they are in areas that our team knows exceptionally well, and we are comfortable with the risk profile because of the experience that we can bring to the table,” he said.

Global food and agriculture production (driven by human consumption) contributes 26 per cent to total global greenhouse gas emissions; about 80 per cent of the world’s agricultural land is dedicated to feeding livestock, not people. The meat and livestock industry, despite making headway to reduce emissions, contributes about 10 per cent of Australia’s greenhouse gases, two-thirds of which comes from methane, a natural emission as a result of a cow’s digestion system.

Bishop pointed to rapid changes in areas such as solar and wind, saying that in a decade they had moved from becoming relatively high-risk to mainstream asset classes.

“Fast-forward to today, they are now a very acceptable infrastructure asset class and very accepted by banks for financing,” he said. “We think similar things will play out in other parts of the climate space [for example food, agriculture and natural capital].”

Co-founder Paul Hunyor highlighted the example of the shift from chemical-based agriculture to biology-based agriculture, including solutions for soil carbon sequestration.

“The last 50 years of agriculture has been about increasing yields with chemical additives. And the next wave of agricultural innovation will be to unlock microbial and biological solutions, as a critical way of decarbonising agriculture,” Hunyor said.

Aside from CBA, Wollemi says some of its other shareholders include the investment vehicle of Alan Schwartz and Carol Schwartz, University of Sydney, and private equity funds.

As banks compete for climate change-related lending, CBA said it had made a strategic investment in Wollemi to help improve the bank’s expertise in the area, and to accelerate the development of carbon markets.

CBA’s group executive for institutional banking and markets, Andrew Hinchliff, said: “This investment will enable CBA and Wollemi to collaborate on a broad range of initiatives aligned to the bank’s commitment to play a leadership role in Australia’s transition and ambition to help our customers reduce their emissions.”

In response to some scepticism about whether Australia could meet its carbon transition targets, Bishop highlighted the “tailwinds” of strong demand from corporations and regulatory reform, and incentives from governments.

“While there might be concern about whether or not Australia can achieve their targets, or whether or not corporates can achieve their targets, we know there is demand, so our job is to unlock supply to help them achieve their targets,” Bishop said.

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