Project detail - Vinci Lacan IV LP

Who is our prospective customer?

Vinci Lacan IV LP (“Lacan IV” or the “Fund”) is a private equity forestry fund aimed to develop and sustainably manage approximately 65,000 hectares of eucalyptus plantations in Brazil. The Fund is the fourth vehicle managed by Lacan Investimentos e Participações, a Brazilian timberland investment manager responsible for Forest Stewardship Council (FSC) certified forestry assets across approximately 146,000 hectares in Brazil. The Brazilian investment manager is part of Vinci Compass.

What is our funding objective?

The purpose of this investment is to provide long-term capital to support Lacan IV’s forestry investments, which require patient capital due to long biological growth cycles. The Fund seeks to lease degraded pastureland and develop eucalyptus plantations in Brazil, with a primary focus on Mato Grosso do Sul, a region with growing forestry activity and strong demand from the pulp and paper industry. Lacan IV’s investment strategy aims to achieve attractive risk adjusted returns through inflation-adjusted, long-term offtake agreements with major pulp and paper companies. Part of the Fund’s land footprint will be allocated to forest restoration activities.

Why do we want to fund this investment?

Lacan IV fits FMO’s Forestry Strategy aimed at building a diversified forestry portfolio of up to EUR 1 bln by 2030. FMO’s commitment allows the Fund to expand its operational footprint and thereby increase carbon sequestration and production of sustainable wood under strong environmental and social (E&S) risk management.

What is the Environmental and Social categorization rationale?

The proposed investment is classified as E&S Category A given the potential adverse environmental and social risks and negative impacts associated with forestry plantations as well as the size of the Fund. Key risks relate to land use change, from degraded pastureland to plantations, the management of ecological restoration activities and biodiversity conservation outcomes, and labor and working conditions particularly for contracted workers. IFC Performance Standards triggered are 1-6. The Fund develops FSC-certified plantations on leased land and complies with required conservation areas under Brazilian regulation. Land selection follows a structured due diligence process aimed at excluding any land with proprietary irregularities, evidence of forced labor, conflict with indigenous or traditional communities, cultural heritage or areas that cannot be eligible for FSC certification. Plantation development avoids physical involuntary resettlement, protected environmentally sensitive areas, and areas designated for biodiversity conservation. The Fund Manager has developed an Environmental and Social Management System that applies enhanced due diligence to all potential investments, including analysis of land use history, geospatial mapping, environmental and social assessments, and on-site evaluations. Forestry operations are managed in line with FSC Principles and Criteria, supported by periodic certification audits and the implementation of a comprehensive Forest Management Plan. Ecological restoration forms part of the Fund’s strategy, supported by external advisors and emerging internal capacity.