Jennifer L of Carbon Credits reports Ontario Teachers’ Pension Plan buys majority stake in KKR’s Australian carbon project developer:
A Canadian pension fund Ontario
Teachers’ Pension Plan (OTPP) has agreed to acquire KKR’s stake in a
leading Australian carbon markets platform GreenCollar.
KKR acquired the 49% stake in GreenCollar three years ago for $100M.
Greencollar is now worth close to $800 million so KKR pocketed a nice
return on their investment with this sale to OTPP. This
investment marks Ontario Teachers’ deepening commitment to GreenCollar,
building upon their initial investment in March 2022.
The pension fund will now hold a
significant majority stake in the company, though the financial terms
weren’t disclosed. GreenCollar CEO and Co-founder James Schultz will
remain as the business leader and a substantial shareholder.
Delivering Positive Environmental Impacts
The OTPP continues to look for
positive environmental impacts of their investments. As one of the
world’s biggest pension funds, it boasts net assets of C$249.8 billion as at June 30, 2023.
OTPP’s climate strategy reflects its
commitment to lowering the environmental impact of its portfolio. Its
strategies also capitalize on investment opportunities that support the
transition to a net zero future. And acquiring KKR’s carbon project
developer is one of those decarbonizing strategies.
KKR initially invested in GreenCollar in 2020 as part of its Global Impact strategy, focusing on companies contributing to the United Nations Sustainable Development Goals (SDGs).
GreenCollar,
a certified B corporation, aligns with SDG 13 (Climate Action) and
supports other sustainable goals like SDG 15 (Life on Land) and SDG 14
(Life Below Water) through its environmental initiatives.
A notable feature of this deal is
that GreenCollar will become the first Global Impact Fund investment to
implement a comprehensive employee ownership plan. Under the plan, all
GreenCollar workers will join to bolster company strength, financial
inclusion, and engagement.
They also had about 10% of the private equity, meaning they will be dividing around $75 million in cash.
GreenCollar is a profit-for-purpose
organization. It’s the leading environmental markets project developer
and investor across the Australian climate, water quality, biodiversity,
and plastics markets.
The Australian carbon credit project
developer and investor has expanded internationally. The expansion
includes forest protection projects in SouthEast Asia, plastic recovery
projects in Africa and the Pacific, and cook stove projects in Southern
Africa.
Being the largest project developer
in the Australian carbon market, GreenCollar handles 220+ projects
covering more than 10 million hectares and generating over 126 million
Australian Carbon Credit Units (ACCUs). ACCUs are initiatives that avoid
clearing vegetation in Australia.
Investing in Carbon Credits as Market-Based Solution
In 2021, Ontario Teachers’ has also
supported carbon market developer GreenCollar with a $250M investment,
apart from last year’s funding. This alongside KKR investment accounted for about 2/3 of the developer’s shares.
The generated carbon credits are sold by GreenCollar to first and secondary markets.
OTPP supports GreenCollar because
they see the positive impact of its carbon credit projects which align
with their return goals.
In this new transaction, the Ontario
Teachers’ Natural Resources group will manage the investment. Operating
within the Infrastructure and Natural Resources department, the group
boasts extensive experience investing in various environmental sectors,
including agriculture, aquaculture, timberland, and natural climate
solutions.
Remarking on their new deal, Senior Managing Director Christopher Metrakos said that:
“We
are pleased to increase our investment in GreenCollar… a proven leader
in delivering positive environmental outcomes with market-based
solutions and we are excited to continue supporting the company in its
next chapter of growth in Australia and beyond.”
In Australia, KKR
has invested across sectors including financial services, healthcare,
infrastructure, technology, real estate, consumer goods, etc. since
2007. The global investor has also impact investments in other regions
such as in Asia Pacific.
Since 2011, KKR portfolio companies
have awarded billions of dollars through broad-based equity programs to
60,000+ non-senior employees. In all these investment programs, a
culture of employee ownership is reinforced.
Ontario Teacher’s transaction with KKR will close in the 4th quarter of 2023, pending customary regulatory approvals.
Interests and investment opportunities in environmental programs are growing, with global carbon markets expected to hit $22T by 2050.
Ontario Teachers’ Pension Plan’s
expanded investment in GreenCollar demonstrates its commitment to
environmentally responsible investments and carbon reduction strategies.
If more large pension plans choose to have the same goals as OTPP, the
planet will see significant carbon reductions.
Michiel Williams of Net Zero Investor reports Canada’s $247bn OTPP seizes full control of GreenCollar in KKR deal:
Canadian pension giant Ontario Teachers’ Pension Plan
has confirmed it is freeing up capital to add Australian environmental
markets platform GreenCollar to its sustainable investment portfolio.
Although financial details of the transaction have not been
disclosed, Ontario Teachers’ did say it is acquiring GreenCollar by
buying the shares of investment firm KKR and other shareholders.
GreenCollar is not a new investment for $247 billion Ontario
Teachers: it made its first investment in March of last year, but
following the latest transaction it has now seized full control.
The firm confirmed it is business as usual as GreenCollar CEO and co-founder James Schultz (pictured above) continues to stay in his post and will remain a minority shareholder.
Ontario Teachers’ Natural Resources group, which is part of its
Infrastructure and Natural Resources department, has significant
experience investing in agriculture, aquaculture, timberland, and
natural climate solutions, including in Australia where it has a large
agriculture portfolio.
The pension fund is expected to play a pro-active role in the direction of GreenCollar. Chief investment officer Ziad Hindo, told Net Zero Investor
recently that "one of the most important actions we can take as
investors is exercising our voting rights to influence positive change.
This is particularly true for topics related to effective boards and
governance, which have a huge impact on the long-term performance and
sustainability of businesses."
Elaborating on OTPP's long-term strategy, Hindo said: "We also have a
plan to allocate around $5 billion to so-called high carbon transition
assets, with a goal of using our capital and expertise to help select
high emitting companies decarbonize faster."
"We are taking a multi-pronged approach. This includes increasing our exposure to green investments."
-- OTPP CIO Ziad Hindo
KKR first invested in GreenCollar in 2020 as part of its global
impact strategy, which focuses on companies that contribute to
measurable progress toward one or more of the United Nations Sustainable
Development Goals (SDGs).
As a certified B corporation and provider of environmental
initiatives that reduce the impact of climate change, GreenCollar’s core
business directly contributes toward SDG 13 (Climate Action) and
supports other sustainable goals, including SDG 15 (Life on Land) and
SDG 14 (Life Below Water).
GreenCollar markets itself as the first global impact fund investment
to implement a broad-scale employee ownership plan as “once the
transaction has completed, all employees at GreenCollar will share in
the proceeds from the sale under a program that aims to build stronger
companies and drive greater financial inclusion through employee
ownership and engagement,” Ontario Teachers’ said.
The transaction is expected to close in the fourth quarter of 2023, subject to regulatory approval.
Ontario Teachers' recently put out a press release on the acquisition of KKR’s stake in environmental markets platform GreenCollar:
SYDNEY, AUSTRALIA, & ONTARIO, CANADA –
Ontario Teachers’ Pension Plan (Ontario Teachers’) and KKR, a leading
global investment firm today announced the signing of a definitive
agreement under which Ontario Teachers’ will acquire KKR and other
shareholders’ stakes in GreenCollar, a leading Australian environmental
markets platform. Financial terms of the transaction were not disclosed.
Ontario Teachers’ first became an investor in
GreenCollar in March 2022. With this latest investment, Ontario
Teachers’ deepens its relationship with GreenCollar, taking on a
significant majority stake in the Company, with GreenCollar CEO and
Co-founder James Schultz continuing to lead the business and remaining a
significant shareholder.
Ontario Teachers’ Natural Resources group, which is part
of the Infrastructure and Natural Resources department, has significant
experience investing in agriculture, aquaculture, timberland, and
natural climate solutions, including in Australia where it has a large
agriculture portfolio.
Christopher Metrakos, Senior Managing Director, Natural Resources at Ontario Teachers’,
said: “We are pleased to increase our investment in GreenCollar and to
continue supporting James and his team in their mission to restore and
enhance natural capital in areas like biodiversity and water quality.
GreenCollar is a proven leader in delivering positive environmental
outcomes with market-based solutions and we are excited to continue
supporting the company in its next chapter of growth in Australia and
beyond. We’d like to thank the team at KKR for their support and
partnership on this investment.”
James Schultz, CEO and Co-Founder of GreenCollar,
added, “We look forward to our deepening relationship and collaboration
with Ontario Teachers’ and tapping into their knowledge and expertise
in the natural resources sector. We also want to extend our sincere
gratitude to KKR for their support and commitment over past few years.”
KKR first invested in GreenCollar in 2020 as part of its
Global Impact strategy, which focuses on companies that contribute
measurable progress toward one or more of the United Nations Sustainable
Development Goals (SDGs). As a certified B corporation and provider of
environmental initiatives that reduce the impact of climate change,
GreenCollar’s core business directly contributes toward SDG 13 (Climate
Action) and supports other sustainable goals, including SDG 15 (Life on
Land) and SDG 14 (Life Below Water).
GreenCollar is the first Global Impact Fund investment
to implement a broad-scale employee ownership plan. Once the transaction
has completed, all employees at GreenCollar will share in the proceeds
from the sale under a program that aims to build stronger companies and
drive greater financial inclusion through employee ownership and
engagement.
George Aitken, Managing Director and Head of KKR Global Impact, Asia Pacific, said,
“GreenCollar is a great example of a solutions-oriented business that
KKR looks to support through our Global Impact strategy, addressing some
of the world’s biggest challenges such as climate change. Together with
James, Ontario Teachers’ and the whole team at GreenCollar, we have
made great strides in advancing GreenCollar’s important mission. It’s
been a fantastic journey. We strongly believe that an ownership
mentality among employees can build a stronger culture, create a more
engaging experience, and ultimately drive stronger business performance –
and the results speak for themselves here. Going forward, we are
confident that Ontario Teachers’ and the team will continue building on
that success.”
GreenCollar is the latest example of KKR’s focus on
employee ownership and engagement as a key driver in building stronger
companies and driving greater financial inclusion. Since 2011,
KKR-backed companies have awarded billions of total value through
broad-based equity programs to over 60,000 non-senior employees across
more than 35 companies. In all cases, the employee ownership programs
are an incremental benefit and not in exchange for benefits, wages or
wage increases.
The transaction is expected to close in the fourth quarter of 2023, subject to customary regulatory approvals.
KKR was advised by Gilbert & Tobin and UBS. Ontario Teachers’ was advised by Baker & Mackenzie and EY.
****
About GreenCollar
GreenCollar is a profit-for-purpose organisation, and
the leading environmental markets project developer and investor across
the climate, water quality, biodiversity and plastics markets in
Australia. Founded in 2011, GreenCollar works with landowners and
managers throughout Australia to develop projects that create commercial
opportunities by generating environmental credits, while caring for the
environment. GreenCollar’s management team are widely recognised as
thought leaders in the environmental markets industry.
About Ontario Teachers’ Pension Plan
Ontario Teachers' is a global investor with net assets
of C$249.8 billion as at June 30, 2023. We invest in more than 50
countries in a broad array of assets including public and private
equities, fixed income, credit, commodities, natural resources,
infrastructure, real estate and venture growth to deliver retirement
income for 336,000 working members and pensioners.
With offices in Hong Kong, London, Mumbai, San
Francisco, Singapore and Toronto, our more than 400 investment
professionals bring deep expertise in industries ranging from
agriculture to artificial intelligence. We are a fully funded defined
benefit pension plan and have earned an annual total-fund net return of
9.4% since the plan’s founding in 1990. At Ontario Teachers’, we don’t
just invest to make a return, we invest to shape a better future for the
teachers we serve, the businesses we back, and the world we live in.
For more information, visit otpp.com and follow us on LinkedIn.
About KKR
KKR is a leading global investment firm that offers
alternative asset management as well as capital markets and insurance
solutions. KKR aims to generate attractive investment returns by
following a patient and disciplined investment approach, employing
world-class people, and supporting growth in its portfolio companies and
communities. KKR sponsors investment funds that invest in private
equity, credit and real assets and has strategic partners that manage
hedge funds. KKR’s insurance subsidiaries offer retirement, life and
reinsurance products under the management of Global Atlantic Financial
Group. References to KKR’s investments may include the activities of its
sponsored funds and insurance subsidiaries. For additional information
about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group’s website at www.globalatlantic.com.
Alright, with al the hoopla about Ziad Hindo departing OTPP, I never got around to covering this acquisition and I think it's an important one for Teachers'.
Teachers' is committed to sustainable investing and transition finance.
This deal checks all the boxes and even though financial details were not made available, sources say Teachers' paid A$600M for KKR's 49% stake in GreenCollar.
I personally do not know much about Green Collar but if KKR invested in this Australian carbon project developer as part of its Global Impact strategy, then I can assure you they saw huge potential here.
And now it's part of Ontario Teachers' natural resources portfolio.
Christopher Metrakos, Senior Managing Director, Natural Resources at Ontario Teachers’,
said:
“We are pleased to increase our investment in GreenCollar and to
continue supporting James and his team in their mission to restore and
enhance natural capital in areas like biodiversity and water quality.
GreenCollar is a proven leader in delivering positive environmental
outcomes with market-based solutions and we are excited to continue
supporting the company in its next chapter of growth in Australia and
beyond. We’d like to thank the team at KKR for their support and
partnership on this investment.”
I am eager to find out what lies ahead for Green Collar and how it will benefit from Teachers' brand and vast global network.
GreenCollar,
a certified B corporation, aligns with SDG 13 (Climate Action) and
supports other sustainable goals like SDG 15 (Life on Land) and SDG 14
(Life Below Water) through its environmental initiatives.
In 2021, Ontario Teachers’
supported carbon market developer GreenCollar with a $250M investment,
apart from last year’s funding. This alongside KKR investment accounted for about 2/3 of the developer’s shares.
The generated carbon credits are sold by GreenCollar to first and secondary markets.
Interestingly, OTPP's press release states GreenCollar is the first Global Impact Fund investment to implement a
broad-scale employee ownership plan. Once the transaction has completed,
all employees at GreenCollar will share in the proceeds from the sale
under a program that aims to build stronger companies and drive greater
financial inclusion through employee ownership and engagement.
Since 2011, KKR portfolio companies
have awarded billions of dollars through broad-based equity programs to
60,000+ non-senior employees. In all these investment programs, a
culture of employee ownership is reinforced.
KKR takes this new ownership model very seriously and I commend them for it.
Below, GreenCollar is Australia’s largest environmental markets investor and project developer. They aim to prove that the best way to achieve lasting environmental outcomes is to place a value on the environment and enable markets to provide incentives and payment for sustainable land management practices and ecosystem services. They help farmers, graziers, traditional owners and other land managers to identify and create commercial opportunities through nature-based projects that enhance their productive agricultural enterprise while caring for the environment and delivering tangible social and economic benefits.
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