The firm has received $150 million worth of soft commitments from global companies—such as oil firms or tech majors—wanting to buy these carbon credits resulting from the carbon sequestration, to offset their carbon emissions.

Sequestration is the process of capturing and storing carbon, while a permanent vehicle has unlimited tenure.

“Investing in nature with bio sequestration is effectively helping poor people create assets without having an obligation to return the money and try to create returns through voluntary carbon trade,” Rai said. Bio sequestration, or carbon sequestration, uses trees—through the conversion of carbon dioxide to oxygen—to remove carbon dioxide from the environment.

“We have received interest from all the large global companies, who need these offsets,” Rai said.

Aavishkaar plans to identify and mobilize small landowners, helping them grow more trees and adding density to existing forest lands.

The firm will invest in farmers and create groups that will plant local tree varieties such as sal or teak over 5,000 to 10,000 acres of farmland.

“As the trees start growing and sequestering carbon, the plan is to bring in an international agency which can evaluate the systems and processes that are put in place and certify that the carbon being produced is of high integrity.”

The vehicle will also invest in “agriculture and land use systems, afforestation/reforestation, mangroves and wetlands regeneration, other community-based carbon projects such as efficient cookstoves, biogas, biochar,” according to a note on the firm’s investment thesis.

For this, the firm will “build and invest in technologies which enhance efficiency and effectiveness of carbon project execution, monitoring and verification, and engage in market making and trading of carbon”.

Carbon credits trade at $15–50 apiece in global markets where “high integrity carbon” commands a premium.

Aavishkaar first considered launching a $350 million–$500 million fund for carbon sequestering in June 2022, Mint reported at the time. Although it found interest from investors, including development finance institutions, it has since changed its thinking. Funds usually have a 10-year tenure, which means that in such a structure, the firm will be obliged to exit just when the trees start sequestering most carbon dioxide.

“A lot of investors are interested, but we have been asking ourselves if we should we raise this capital through a permanent vehicle as no limited partner (an investor in a fund) will stay invested for 30 years. A fund structure (in carbon sequestering) will require us to sell just when the tree is giving us the maximum return,” Rai said.

Aavishkaar’s permanent capital vehicle, to be led by Sanchayan Chakraborty, is likely be incorporated overseas by the end of March.