Restoration Seed Capital Facility

Document Summary: 

Organizational profile: The Restoration Seed Capital Facility (RSCF) supports private investment in forest restoration projects in developing countries, contributing to climate adaptation and mitigation, biodiversity, and sustainable livelihoods. The objectives of the Restoration Seed Capital Facility are to stimulate more private fund managers and investment advisors to set up new funds that focus on forest and landscape restoration, build strong pipelines, and make sure that more projects reach financial close. The facility is funded by the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety, and the Government of the Grand Duchy of Luxembourg, Ministry of the Environment, Climate and Sustainable Development.

The Facility offers three support lines to eligible fund managers. The Fund Development support line (SL1) supports fund managers who are setting up a new forest restoration-themed fund. The Pipeline Development support line (SL2) supports fund managers in building a project pipeline while at the same time delivering capacity-building at the local developer level. The Project Development support line (SL3) supports fund managers in meeting the development costs of getting seeded projects to full financial close. The Facility works through co-financing (matching of funds on a dollar for dollar basis) of fund development, pipeline development and project development costs.

Financing Instrument: Grants, Reimbursable Grants

Project scale: SL 1 is a conditional grant limited to US$750,000 that is paid back once the fund reaches a first close.

SL 2 provides support in conjunction with SL 3 for a total amount of between US$0.5 million and US$2.5 million per partner. SL 2 is a non-reimbursable grant and accounts for up to 30% of the total contract volume.

SL 3 accounts for 70% of the total contract volume and is a conditional grant that is reimbursable for projects that reach financial close.

Eligible recipient countries regions/country groups: The facility supports fund managers or investment advisers targeting investments in all ODA-eligible countries, with a focus on Latin America, Africa and South-East Asia.

Recipient categories: Businesses

Eligibility Criteria: The applicants must be either fund managers or investment advisors to funds, raising a new or managing a current investment vehicle dedicated to sustainable land-use and Forest Landscape Restoration.

The geographical scope includes all ODA-eligible countries, with a focus Latin America, Africa and South-East Asia.

The investment vehicle should be focused on forest restoration and protection, combined with sustainable land-use activities, such as:

- Agro forestry and sylvopastoral systems

- Sustainable forest management and sustainable forestry on degraded lands

- Non-timber forest products

- Generation of carbon credits & payments for ecosystem services

- Supply chain investments to support restorative activities

Applicants must also demonstrate robust Environmental and Social Risk Management policies and processes.

The Facility cannot provide any form of equity. It does not support stand-alone projects. All Facility support comes as co-financing of partner expenses.

Application guidelines: Applications to the Facility follow a four-step process:

1. Introduction- Any party may express an interest in obtaining support at any point throughout the operational phase of the Facility. Additional guidance for project proposals can be found on the Facility website. There are no specific deadlines or cut-off dates other than when the available budgets are fully committed.

2. Proposal- Interested entities are invited to submit a proposal once the Facility Agent has conducted a preliminary check of the eligibility for support. The potential partner - in cooperation with the Facility Agent – prepares a proposal, which will be submitted to the Investment Advisory Committee (IAC).

3. Due Diligence- After the IAC has endorsed the proposal, the Facility Agent together with the Programme Management Unit (PMU) proceeds to an on-site due diligence. The due diligence will follow a standardized process, similar to the one adopted by development finance institutions. After final approval, the Facility Agent will start contract negotiations.

4. Contracting- If the due diligence is completed successfully, the selected partner enters into a cooperating partner agreement (CPA). Once contracted, the supported partners report on their progress through quarterly progress reports and regular conference calls.

Publication Date
Monday, 01 March 2021
Applicable location
Sustainable land use
Forest landscape restoration
Climate change
Biodiversity conservation
Financing opportunities