As a continuation of our commitment to ESG (Environmental, Social and Governance) investing, Matrix began looking at smaller unexploited opportunities with high barriers to entry and high expected returns. Given the low interest rate environment, institutional capital has compressed the future returns of most asset classes and strategies.
Wetland mitigation or ecosystem offsets for certain unavoidable environmental impacts from private & public development are required by federal law (Clean Water Act of 1972, Endangered Species Act of 1973) and in some regions by state regulations as well. Both the impacts and offsets are regulated by the Army Corps of Engineers, the EPA, and/or the US Fish and Wildlife Service. In general, land development of any type that degrades a certain protected habitat must offset this habitat DEBIT with a corresponding CREDIT. OFFSETS or CREDITS are produced by mitigation projects that restore, preserve, protect and manage this corresponding habitat in perpetuity. OFFSET projects are highly regulated, highly technical, time-consuming and poorly understood, raising barriers to entry and restraining capital and efﬁcient pricing.
Matrix partnered with an experienced developer of ecosystem offset projects, and a pioneer and leader in the Florida Wetland mitigation banking industry, to implement a strategy to develop a geographically diversified portfolio of credits with a projected internal rate of return 20-25% over the life of the Fund.