Ambipar buys Biofílica and enters Brazil’s carbon credit market

RIO DE JANEIRO, BRAZIL – Ambipar has just announced the acquisition of Biofílica, a pioneering company in the development of forest projects for carbon credit generation, thereby establishing a foothold in the greenhouse gas compensation market and expanding its service offering in the ‘environment’ sector beyond waste treatment.

This is Ambipar’s 18th acquisition since its IPO in July last year. The company’s shares have soared by almost 75% since then.

Through the acquisition, Biofílica will have access to capital and clients to scale up its forestry projects business and expand its range of environmental services, by not only generating carbon credits from other activities, such as agriculture, but also by entering new segments.

“The plan is to maintain the focus on forest conservation in the Amazon, but also to turn the company into the world’s largest provider of nature-based solutions, a ‘one stop shop’ with a set of solutions for clients who want to become carbon neutral,” said Biofílica’s founder and CEO Plínio Ribeiro, who will remain at the helm of the company.

The acquisition of 53.6% of Biofílica’s shares will be mainly realized in the form of a capital increase, which will dilute the current shareholders, with the exception of Ribeiro who will keep his stake.

A smaller part of the transaction will be secondary, but none of the current partners are leaving the business. Among the investors are MOV impact fund, with resources from the founders of Natura and Lorinvest, from the Lorentzen family (ex-Aracruz) and Zestpar.

For Ambipar, the acquisition will provide it with a solution to meet the growing demand for compensations, not yet present in its portfolio.

The company’s Environment arm currently offers waste management solutions aimed mainly at industry, from reverse logistics services to waste valorization, transforming what would otherwise be waste into new products and raw materials within the circular economy concept.

Ambipar does not yet generate carbon credits from its operations, but has stated that it may enter this market by certifying credits from recycling and waste valorization projects – which is being considered as an option by the market.

Yet the market for voluntary credits from waste management is only a fraction of the forestry compensation segment, which boomed last year amid growing demand from companies with net zero commitments.

Amid the boom, the so-called Nature Based Solutions (NBS) industry is undergoing a strong worldwide expansion, with major players acquiring companies the size of Biofílica. Yesterday, energy and commodities trading company Hartree Partners announced the purchase of Wildlife Works, a kind of American Biofílica.

“It’s a sector where you need scale to be relevant from a climate standpoint, and you need capital to achieve that scale,” Ribeiro says.

Portfolio of solutions

Biofílica was a pioneer in the development of forest conservation projects in the Amazon called REDD+, or Reducing Emissions from Deforestation and Forest Degradation, and currently has the world’s largest area for the certification of forest carbon credits, with 1.5 million hectares.

The logic is to generate carbon credits based on the prevented deforestation of preserved areas, and the money raised from the credit sales is used to finance preservation. (As a developer, Biofílica acts as an intermediary, charging a fee for the project’s development and commercialization.)

Ribeiro says that the company’s main growth potential will still come from its original business. Yet Biofílica has begun to prepare for expanding its range of activities to generate carbon credits on two other fronts: agriculture and the restoration of degraded forest areas.

On the forest restoration front, a project to replant 60,000 hectares of Atlantic Forest in Pontal do Paranapanema is underway. If carbon credits in conservation projects are generated by prevented deforestation (which would release CO2), in replanting the carbon is removed from the atmosphere.

Finally, the company is also starting to look at so-called ‘blue carbon’ projects, developed in coastal regions such as mangroves, and which have great potential in Brazil.

“The goal is to multiply between 5 and 10 times our capacity to generate carbon credits in the next few years,” Ribeiro says.

Forest floor’s Quinto Andar

Apart from generating carbon credits, the company has opened a new environmental reserve compensation business unit. According to the Forestry Code, rural producers need to preserve a percentage of native forest on their properties, varying according to the biome. But many are failing to comply with this requirement.

Biofílica developed a kind of ‘forest reserve bank,’ with 4.6 million hectares in all Brazilian biomes to offer compensation to farmers who need to comply with the minimum percentage. The logic is to work as a kind of forest real estate broker. “My dream is to be the forest’s Quinto Andar,” Ribeiro jokes.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.