Exclusive-Investor Kyle Bass pivots to green credits, returned cash from hedge fund
9:03 am Thursday, February 03rd, 2022
By Svea Herbst-Bayliss
(Reuters) – Investor Kyle Bass, who spent much of his career betting on sovereign debt crises and interest rates, is shifting focus from hedge funds to the environment with a firm that will buy rural land and create environmental mitigation offsets.
The new firm, Conservation Equity Management, was officially launched on Thursday and plans to rebuild wetlands, streams, and endangered species habitats to help create offsets, or tradable credits, to diminish the ecological damage from development. These types of credits are highly sought after by large corporations and developers which generate emissions in their businesses but are pledging to cut or offset them.
The land in Texas and nearby states might also be used for regenerative cattle grazing and renewable energy, Bass said. And the firm plans to elevate the ecosystem of the properties it buys and then sell the parcels for more over time.
Bass, who grew up playing in streams and woodlands near his home in Texas, is pivoting to a new form of investing as pension funds, endowments and wealthy families search for ways to make money while improving the environment.
“This is the right moment for Conservation Equity,” Bass said.
“As more companies and people move to Texas and other pro-business, low-tax states, there will be devastating environmental consequences, forcing firms to consider their physical environmental impacts, carbon footprints and mitigation options.”
The new firm marks a fresh chapter in the life of a hedge fund manager who rose to prominence by having bet against the overheated housing market during the financial crisis and later on Greek debt and the Japanese yen.
Bass launched Hayman Capital Management in late 2005 in Dallas and in 2007 the fund gained 200% on bets against the subprime market. By the end of 2020, Hayman’s assets had dwindled to roughly $300 million and Bass decided to return the bulk of the money to investors in 2021 after having earned them a return of 14% in the first three quarters of the year.
Now he has teamed with forester and biologist Terry Anderson to shift into a more private-equity focused firm he says will pay off over time, as investors need hard assets like real estate as a hedge against rising prices and federal monetary policy sparked by the pandemic.
“Conservation Equity seeks to capitalize on meaningful trends in geography, migration, central bank balance sheet expansion, and rural land as an asset class in order to offer investors both purpose and profits,” Bass said.
Conservation Equity Management has already completed two transactions: the Bahia Grande Conservation Parcel and the Cherokee Ridge River Farm, where Bass held an investor meeting this week as a winter storm hit the area.
(Reporting by Svea Herbst-Bayliss; Editing by Stephen Coates)
