ejidoverde risi v160316
TRANSCRIPT
SHAUN PAUL, CEO
SUSTAINABLE FORESTRY
REINVENTING INVESTMENT FOR
CENTURY21 ST
PINE RESIN IS A
NATURAL, RENEWABLE AND
SUSTAINABLEPRODUCT
DERIVATIVES USED WIDELY:
chewing gum, inks, adhesives, pine oil, soft drinks, paints, coatings, aromatics, wine, food additives to reduce cholesterol, food flavors, vitamin intermediates, drilling fluids, mining chemicals, surfactants, and other consumer goods.
A millenarian commodity always in demand
México’s oldest and largest distillery(here ca. 1940), processes around
10,000 tons
PINOSA
per year.
MICHOACAN’S RESIN TAPPERS
The Purépecha have been
tapping for thousands
of years.
Michoacán is of the national market
México is the global producer
5#
95%
Demand to establish resin orchards exceeds current capacity
Total investment for planting and maintenance:
From year 10 onwards:
US $2000US$3,400
hectare totalhectare annual revenue from resin production
TODAY’S VICIOUS CYCLE IN
MICHOACÁN
Destruction of the forest by outside forces
Less pine resin income
The loss of local opportunities
Emigration and separation of families
Less residents to protect the forest
Cultural identity loss
TODAY’S PINE CHEMICAL MARKETPLACE
Source: RISI 2016
Pine-Derived Chemicals Market worth
$4.8 BILLIONby 2020*
Global market demand is
2.3 METRICtons/year, equivalent to raw cocoa
#1 GLOBAL PRODUCERChina, is replacing pine resin forests with eucalyptus plantations
Ingredient substitution by petrochemicals is
NEGLIGIBLE
#3 GLOBAL PRODUCER
Indonesia, undergoing deforestation
#5 GLOBAL PRODUCERMexico, is led by Ejido Verde and its industry partners confronting diminishing pine resin forests
* Markets & Markets, 2015
WHAT DOES
DO?
OUR GOAL
CORE STRATEGY
INDUSTRY
COMMUNITIES
of degraded lands with resin producing pine tree plantations
• Founding investments successfully piloted ‘resin orchards’˝• Purchase resin from plantations
• Establish & maintain pine resin plantations˝• Resin Tappers: earn 5x more tapping resin plantations
compared to subsistence farming elevating tappers into the middle class
EXPAND PARTNERSHIPS to establish commercial plantations on communally owned land
RESTORE 12,000 HECTARES
APowerfulWeaponAgainstRuralPoverty
AninvestmentofUS$3millionbuys2,000hectaresofplantationsand…
ForIndigenoustappers:
IncomeofUS$600millioninthenext30years
Forindustry:
Almost10,000tonsofadditionalpineresinperyear
Fortheenvironment:
Carbonsequestrationandaquifers
Resin-Pine Plantations on Indigenous Lands
BRAZIL INSPIRED TECHNOLOGY
TRADITIONAL WILD HARVEST COMMERCIAL PLANTATIONS80 TREES / HA 800 TREES / HA
1978
1979
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
1993
1994
1995
1996
1997
199
8
199
92
00
0
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
0
20,000
40,000
60,000
80,000
100,000
120,000
CRUDE GUM ROSIN
2010 ESTIMATE100.000 MT
BRAZIL INSPIRED REFORESTATION TECHNOLOGY
Source: aeldorado.com.ar
Brazil began tapping pine resin 1978. Since then, the country has become the second largest world producer—without native pine forests.
STATE-OF-THE-ART TREE NURSERIES
NATIVE PINE RESIN SPECIES TO MICHOACÁN
• P. lawsonii˝
• P. leiophylla˝
• P. oocarpa˝
• P. pseudostrobus˝
• P. pringlei˝
• P. teocote˝
• P. caribaea
TECHNOLOGYPACKAGE
Genetic selection of high yielding varietals, ˝Cloning & hybrid R&D.
Mycorrhizae application
Mechanized site˝preparation
Plantation˝establishment
Fertilization
Integrated pest˝management
800 trees/ha ˝optimal density
A WORLD CLASS TEAM
25 years building companies with indigenous communities like Pico Bonito
Forests, EcoLogic Development Fund, Root Capital, and reforestation initiatives
across Latin America.
SHAUN PAUL˝CEO
FREDO ARIAS-KING˝PRESIDENT & FOUNDER
RENATO SATTA˝CHIEF FORESTRY OFFICER
ANTOINE COCLE˝FINANCIAL ADVISOR
President of T&R Chemicals, Inc. (pine oil manufacturer), and chief spokesperson for
the resin industry of Mexico.
30 years experience, 13 years leading large-scale pine plantation establishment
& management in Columbia, Uruguay & Chile.
Managing director of SVX Mexico. 9 years in capital advisory services for JP
Morgan London and Agora Partnerships.
22 years of experience, previous work as Finance Controller at Global Offshore
México, Citi, and Simex; Audit Manager at Arthur Andersen.
CARMEN MONROY˝FINANCIAL DIRECTOR
ACCOMPLISHMENTS TO DATE
2009 2010 2012 2014
Ejido Verde established as a partnership between Mexican resin industry leaders and indigenous
resin tapping communities.
Revenue stream established from Mexican
government pay-for-success reforestation
contracts for restoration
Validated business model with innovative financing &
technology to establish ‘Resin Orchards’
Kiva joins as first ˝international investor
2015 2015 2016
2,000 hectares under management US$2 M loan approved by
Inter American Development Bank
Capacity established to plant 1000 hectares/year;
RISI Conference
EJIDO VERDE’S FINANCIAL HIGHLIGHTS
Capital Committed to date:
US $5.2 MMexican investors, resin industry, Kiva
Anticipated investment round:
US $5 M +equity anchor investor toward ˝$20 M capital requirement
Investor expected IRR 16% +20 year term structured exits & early redemption options
HOW THE INVESTMENT WORKS
Provides the investment & technology for
plantation establishment
Provide “free” degraded land not currently in production
INDIGENOUS COMMUNITIES
When trees begin producing resin after 8-10 years, EV will receive 10% of the value of the resin bought by the industry (revenue share)
SOURCES OF REVENUE FOR EJIDO VERDE
• Pay-for success government contracts from reforestation ˝• Anticipated carbon credits˝• Communities provide 10% of resin to repay loans
ADDITIONAL REVENUE STREAMS
EJIDO VERDE PER HA INVESTMENT** USD
-1000
-750
-500
-250
0
250
500
750
1000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Government Pay for Success Investor Revenue from resin productionCost to implement Carbon Credit
Over 20 year investment, 16%+ expected IRR
TODAY’S VICIOUS CYCLE IN
MICHOACÁN
Destruction of the forestby outside forces
Less pine resin income
The loss of local opportunities
Emigration andseparation of families
Less residents to protect the forest
Cultural identity loss
BEFORE
OUR VIRTUOUS CYCLE IN
MICHOACÁN
Balance cost / benefit in favor of tapping
Increase incomeof tappers
Reduced emigration
Restoration and conservation of forests
Encourage tapping
Cultural identity˝
maintained
WITH
IMPACT
ENVIRONMENT
SOCIAL
AS A WHOLE• Governance of communities, forests and watersheds
strengthened
• 6 MILLION TONS of greenhouse gas reductions˝
• Soil and watershed restoration
• Indigenous cultures strengthened by expanding traditional livelihoods & cultural practices˝
• 12,000 permanent jobs created propelling resin tappers into the middle class
SUPPORTING PARTNERS
Union Nacional de Resineros
IS˝THE
RESIN TAPPER
BESTFOREST STEWARD.
A“ “Center for International Center for International Forestry Research (CIFOR)
Shaun Paul, CEO Ejido Verde
USA 617-515-0070
MEX [+52] 443-312-0448
Morelia, Michoacán. México
