The public-private blended finance vehicle was launched two years ago with seed investment of £30m (€36m) from the UK government.
The UK government-backed UK Nature Impact Fund has temporarily stopped fundraising after the withdrawal of one of its fund managers.
As reported by Impact Investor, the UK’s Department for Environment, Food and Rural Affairs (Defra) appointed US investment manager Federated Hermes and UK-based environmental impact investment advisor Finance Earth as preferred fund managers to launch the UK Nature Impact Fund in November 2022.
Two years on, as first reported by Responsible Investor, Federated Hermes is no longer part of the institutional-scale private markets fund, which focuses on investments across a range of UK nature-based solutions and related nature markets.
Finance Earth and Federated Hermes, alongside cornerstone investor Defra, recently undertook a joint review of the fund “to ensure that the proposed fund can best achieve all partners’ objectives and accelerate the development of the UK’s natural capital markets,” a spokesperson for Federated Hermes said in an email to Impact Investor.
As a result of the joint review, Federated Hermes has decided to “withdraw its sponsorship of the UK Nature Impact Fund”, the spokesperson said.
‘Reviewing options’
The decision “reflects Federated Hermes’ assessment of where it wishes to dedicate resources and at the current time, whilst remaining firmly of the view that natural capital is an important asset class for investors, it has concluded that it is in the interests of its stakeholders to direct its finite resources to other areas” the spokesperson said.
Finance Earth are now “reviewing the options” for the delivery of the UK Nature Impact Fund with Defra, the Federated Hermes spokesperson said, before adding there would be “a short pause in active fundraising for the fund”, which is expected to restart before the end of the year.
“All parties remain confident in the contribution that institutional capital invested in natural capital can make to the UK’s climate and nature targets”, the Federated Hermes spokesperson said.
The UK Nature Impact Fund invests in carbon-rich biodiverse habitats, such as native woodlands, while it also planned to support projects capable of expanding England’s temperate rainforests, some of which can be found in the Dartmoor National Park in the southwest of the country.
