Ecosystem Mitigation Fund Reaches $181m Close

July 05, 2012

By Elza Holmstedt Pell | July 5, 2012 | Environmental Finance

A private equity fund focused on payments for ecosystem services (PES) markets, involving wetlands mitigation and endangered species protection, has raised $181 million.

Investment management firm Ecosystem Investment Partners (EIP) beat its initial target of $150 million for the EIP II fund.

“EIP II closed with a strong and diversified investor base, including foundations and endowments, significant family offices and high net worth individuals and several major US and European pension plans,” a fund statement said.

An early and large investor is New Mexico Educational Retirement Board with a $30 million commitment, said Fred Danforth, managing partner of Baltimore-based EIP.

It will invest in the PES market in the US and acquire 10 to 15 rural properties that are deemed conservation priorities and generate cash flows from the sale of mitigation credits. The firm does not disclose the returns it is targeting.

“We are extremely pleased to be partnering with such an esteemed group of limited partners and are excited at the prospects of providing superior returns, while also being an integral part of restoring and conserving critical resources throughout the US,” Danforth said.

EIP was established in 2006 to capitalise on the PES markets throughout the US, and completed its first investment round (EIP I) of approximately $26 million in May 2008

It most recently invested in the Calcasieu Pine Savanna, a mixed pine and hardwood forest in southwest Louisiana, with primary revenues coming from wetland mitigation banking.

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