Ontario Teachers Pension Plan nabs 33% stake in carbon market developer GreenCollar

Ontario Teachers Pension Plan nabs one-third stake in the carbon market developer, underscoring growth in the local industry.

GreenCollar’s projects include revegetation, soil carbon development and savannah burning.

The growth in the Australian carbon market was underlined on Friday with confirmation Canada’s Ontario Teachers Pension Plan will invest an estimated $250m to buy a 33 per cent stake in developer GreenCollar.

OTPP will be the largest shareholder in the carbon project developer along with KKR, which will own 33 per cent after investing $100m to buy a 49 per cent stake in the company 18 months ago.

The two funds will control 66 per cent, with chief and co-founder James Schultz holding 10 per cent and other management being the major shareholders.

KKR sold down its equity from a 49 per cent stake as part of the deal with other shareholders, including the other founders also selling down.

Over the last 18 months the price of an Australian Carbon Credit Unit has more than doubled to $41 a unit, reflecting increased demand and quality of the Australian market.

The units which equate to one tonne of carbon are sold by the Emission Reduction Fund and are used as offsets by companies wanting to reduce their carbon foot print.

OTPP is one of the world’s biggest pension funds, with around $320bn under management.

This compares to Australia’s biggest fund, AustralianSuper with over $250bn under management.

GreenCollar chief executive James Schultz told The Australian: “the investment is a testament to the strength of the Australian market and challenge before US.”

The company, chaired by former Origin boss Grant King, develops carbon projects including revegetation, soil carbon development and savannah burning to reduce carbon levels on behalf of Australian companies and investments.

It also develops projects offshore in the Pacific, Africa and South East Asia.

The GreenCollar investment was revealed on the final day of the annual Carbon Markets Institute emissions reduction summit in Sydney.

Mr Schultz said initiatives like in principle agreement on so-called Article 6 to draw up an international carbon trading system was one of the benefits of the recent UN conference in Glasgow.

“Significant progress was made to developing standards for an international trading system,” he said.

Mr Schultz is a big advocate of the importance of the market is helping achieve carbon goals.

When asked to comment on the policies of the two main political parties he declined to comment, other than to say “significant progress is being made.”

GreenCollar has also expanded into water and biodiversity projects along with a project to reduce plastic waste from banana plantations in northern NSW.

Mr Schultz was one of four original founders and retains a 10 per cent stake in the company, making him the biggest shareholder outside the two international funds.

Two other of the original backers — former Macquarie bankers Murray Bleach and Peter Salisbury — have sold down to under 5 per cent.

Another founder Lewis Tyndall remains on the board of the company.

Mr Schultz said the new many would help the company expand but added there was no plan to list the company any time soon.

Ontario Teachers’ said its investment “focuses on shaping a better future for the people, places and communities where it invests, including a commitment to have net zero greenhouse gas emissions across its portfolio by 2050.”

In September this year OTTP set targets to reduce portfolio carbon emissions intensity by 45 per cent by 2025 and 67 per cent by 2030, compared to a 2019 baseline.

George Aitken, a Director on KKR’s Private Equity team in Australia, said: “We are delighted to welcome Ontario Teachers’ given their significant expertise in the natural resources sector. KKR is aligned with Ontario Teachers’ in our commitment to drive positive environmental impact and we are confident this new strategic partnership taps into our collective strengths to position GreenCollar for its next stage of growth. Carbon credits and environmental offsets remain an important part of the transition towards sustainability and GreenCollar’s continued growth will help to scale this effort further.”