UK Infrastructure Bank announces first natural capital transaction

The Bank will provide a short-term bridging loan facility to support Highlands Rewilding Limited’s acquisition of the Tayvallich Estate - a 1,300-hectare rural estate in Argyll.

Representing the Bank’s first deal exclusively in Scotland, the pioneering project will aim to provide critical new data and understanding on the restoration of Scotland’s ecosystems.  These new insights are expected to inform more effective land management for biodiversity, which in turn will support the growth of high-integrity natural capital markets.

The Bank’s finance is expected to enable the restoration of temperate rainforest on the Estate, which, once restored, can absorb carbon dioxide, removing it from the atmosphere. The west of Scotland is home to one of the most important remaining temperate rainforest sites in Europe, with this rare habitat now making up just 2% of Scottish woodland.

As noted in the Scottish Government’s 2018-2032 Climate Change Plan, habitat restoration can play an important role in reducing greenhouse gas emissions, enhancing biodiversity, and delivering wider co-benefits. The restoration activities planned for the Tayvallich Estate also support the Treasury’s strategic steer to the Bank that nature-based solutions can contribute to its twin objectives of tackling climate change and supporting regional and local economic growth.

The Bank’s loan will enable Highlands Rewilding Limited to move to further rounds of funding with potential investors, with a view to developing new natural capital business and revenue models on the Tayvallich Estate.

John Flint, CEO of UK Infrastructure Bank, said:

The Highlands Rewilding project on the Tayvallich Estate has exciting potential for climate, biodiversity and economic growth benefits, and I am pleased we are able to provide short-term financial support. The Bank’s investment is intended to support the development of the science, data and understanding needed to deliver high integrity natural capital markets, in line with our mission to boost the innovative infrastructure technologies which will be essential to achieving Net Zero.

Dr Jeremy Leggett, Chief Executive and founder of Highlands Rewilding Ltd, said:

Highlands Rewilding is thrilled to receive this support from the UK Infrastructure Bank. We will be working hard to turn it into a significant scaling of nature-recovery, one congruent with the ambitious targets many governments, including the UK’s, set in the recent global biodiversity treaty signed in Montreal. The Tayvallich Estate, with its huge potential for temperate rainforest restoration and other wonders, is the ideal terrain for this frontier work. And the residents of the Tayvallich area, as we have seen and experienced already, are the perfect local community to work with.

In addition to its climate change impact, the project also has the potential to bring benefits for regional and local economic growth through eco-tourism and joint community ventures.

A spokesperson for Tayvallich Initiative, a community initiative working to secure affordable housing, local jobs, farming and nature restoration across the Tayvallich area, said:

As a proactive community, Tayvallich looks forward to working with our new neighbour Highlands Rewilding to address our most pressing issues, including affordable housing and facilitating options for younger people to live and work in the area.

We feel that Highlands Rewilding’s plans to regenerate nature will create local jobs, while addressing the climate and biodiversity emergency. Tayvallich Initiative and Highlands Rewilding are making good progress in developing a Memorandum of Understanding as an initial step in working together towards those objectives.

A spokesperson for Scottish National Investment Bank said:

We are delighted that the UKIB are able to provide Highlands Rewilding with this short-term facility. This finance enables Highlands Rewilding to quickly progress an initiative which can help stimulate further Natural Capital opportunities across Scotland, which the Scottish National Investment Bank looks forward to engaging on.

Creating new opportunities for investment in natural capital markets is key to helping realise the benefits natural infrastructure provides toward net zero and the economy. You can read more in UK Infrastructure Bank’s recently published discussion paper on natural capital investment.

The Bank’s commitment to lend is subject to the satisfactory completion of due diligence and documentation.

You can read the blog that discusses this deal and sector.