$233M wildlife bonds: RMB’s bold move to save lions and wild dogs
Rand Merchant Bank, inspired by the World Bank's pioneering rhino conservation bond, is stepping up to raise $233 million through wildlife bonds aimed at saving African wild dogs and lions. Collaborating with the Endangered Wildlife Trust and the Peace Parks Foundation, RMB plans to launch these bonds to boost populations of these endangered species across southern Africa. With an innovative structure where conservation efforts replace traditional coupon payments, this initiative promises to attract private investors eager to make a real impact on wildlife preservation. With only about 1,400 African wild dogs left and lions needing reintroduction to areas like Mozambique's Limpopo National Park, this bold move could be a game-changer for conservation finance.
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By Antony Sguazzin
Rand Merchant Bank is emulating the World Bank's ground-breaking rhino conservation bond by aiming to use debt markets to raise money to help African wild dog and lion populations.
The Johannesburg-based investment banking unit of FirstRand Ltd., Africa's biggest bank by market value, is looking to issue five-year bonds worth around $233 million this year and next, some of which will be channeled toward conservation efforts for the two endangered species.
"Kudos must go to the World Bank," said Martin Potgieter, RMB's director of natural capital. "Their mandate is to do interesting things in parts of the world and have the commercial banks copy them."
In 2022 the World Bank priced the world's first wildlife bond, raising $150 million that will be partially used for the conservation of black rhinos at two reserves in South Africa. Returns on those five-year bonds will be determined by the rate of population growth. It said at the time that it hoped that the structure would be emulated.
"It laid out a blueprint for what can be done, even when there were many who believed it not possible to encourage private investors to back a structure like this," Marisa Drew, Standard Chartered Plc's chief sustainability officer, said earlier this year. Drew formerly held the same role at Credit Suisse, which advised the World Bank on the bond.
Returning Lions
RMB, together with South Africa's Endangered Wildlife Trust, plans to sell bonds worth about 600 million rand ($33 million) around November to help boost the population of African wild dogs across southern Africa, Potgieter said in an interview. In about March next year, together with the EWT and the Peace Parks Foundation, RMB aims to sell $200 million of bonds to help reintroduce lions to Mozambique's Limpopo National Park, he said. The issuing of both bonds is not a certainty, he said.
"The EWT is working with Rand Merchant Bank to develop wildlife bonds for both species with the aim of bringing in between 100 million rand to 150 million rand in funding for the conservation of wild dogs and lions," Kishaylin Chetty, the EWT's senior manager for sustainable financing and business partnerships, said in comments sent to Bloomberg. "Hopefully this can be the catalyst for further wildlife bonds in South Africa."
RMB is collaborating with many of the same partners who worked on the World Bank bond, according to Potgieter. Conservation Alpha was tasked with determining the success of the rhino bond and its payments. The Zoological Society of London was appointed as verification agent.
Under the rhino bond's structure the issuer makes contributions toward conserving the animals instead of paying coupons and the buyers of the bond receive a payment based on preset targets for population growth.
There are about 1,400 African wild dogs, also known as the painted dog for its multicolor coat, left in the wild in Africa, according to the International Union for Conservation of Nature. The proceeds that can be used for conservation, about 70 million rand, will be used to enhance a number of fragmented populations in southern Africa, Potgieter said.
In Mozambique, where wildlife populations were decimated during a civil war, the Limpopo National Park was established in 2001 and lies adjacent to South Africa's Kruger National Park. The park is partly managed by the Peace Parks Foundation, which was founded by Nelson Mandela, the Netherlands' Prince Bernhard and the billionaire Rupert family, which controls luxury goods company Richemont.
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