Warren Adams combines conservation and ... - Patagonia Sur

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The economic crisis that circled the world one year after Patagonia Sur was launched, slowed but did not derailthe company’s plans. Mr. Adams said his company has no debt and takes a long haul approach.“Our investors are patient capital,” he said. “They do this because they expect a competitive market return. Wetarget 15 percent or more of a return and so we sailed through the crisis in terms of operating our business. Raisingcapital was frozen for a while.”The company has raised $20 million from individual investors in Chile, the Unites States and around the worldof a $30 million target in the first phase. The amounts range from $125,000 to $2 million. Of the approximately45 investors, ten are seasonal or year-round Island residents.The business side supports the foundation. Investors must contribute going in and coming out. The currentbusiness plan would generate approximately $25 million for the foundation. “It is all very synergistic with thefor-profit side,” Mr. Adams said.Mr. Adams stresses that the company is firmly rooted in Chile. He said a third of the club members and a thirdof the investors are Chilean as are two of the five principals.The investors share a confidence in Mr. Adams and the concept. “They see this as a chance for a good return oninvestment. It’s an asset-backed investment. There’s land behind the value. It is not like it’s a software companythat does not really have a hard asset. And that helped us through the crisis because if you are worried aboutthings that disappear, land doesn’t, and we’re buying it at $150 an acre and you can compare that with land onMartha’s Vineyard.”The next step will be to raise $100 million at which point the company would be relying on institutional investors,Mr. Adams said. Further down the road, his dream is to go public.“The third and real dream is why don’twe IPO conservation?” he said. “Becauseif we can get $15 from someone buyinga share and you get millions of peoplethat want to buy one share of this becausewe’ve proven that it is going to havea nice return, whether it’s a dividendstream or stock going up, wouldn’t thatbe a great way to draw billions of dollarsinto conservation?”Melimoyu, one of the club’s properties, in a bay of the Gulf of Corcovado, featuresdiverse marine life.For now, Mr. Adams is focused on thecurrent plan but with his eyes on the horizon.“My specialty is to keep focused butdream big. You always have to be thinkingnext, but blocking and tacking to getthe first part right.”Right personThat first part relies on investors who believe that the company will be able to add value to the land that protectstheir investment and makes it grow. Fred Khedouri of Chilmark, an investment banker, is one of those investors.In a telephone call from London, England where he is working, Mr. Khedouri said he approached Mr. Adams.He points to Chilmark as an example of how value can be developed. Real estate in Chilmark is more valuableon a relative basis than the rest of the Island he said because it has relatively strict zoning and large lot sizes.In the case of Patagonia Sur, protecting the majority of the land makes the rest more valuable. “It is not by anymeans a traditional approach to development, which is to extract the greatest possible profit,” Mr. Khedourisaid. “That is not happening, and all the investors I think understand that is not happening and they are all fine
with it because they don’t want to be extracting the most value, because then the conservation part would not beas large as it might be.“And that is why to me it is quite appealing, and I know some of the others investors have the same view. It is infact a good balance.”Mr. Khedouri and his wife visited two of the club properties last February with two friends. “It was terrific,” hesaid.“I seem to spend my life being places where a lot of times I wish I had been there 30 years ago, or I was there30 years ago, and it is no longer the same. We certainly have that experience (on the Vineyard).” Patagonia isthat place 30 years ago.“It just struck me as a really good idea. And something that should be encouraged, and I thought that Warrenwas the kind of person whose involvement would be making it a success.”Mr. Khedouri said he contributes to conservation causes. This he views as an investment.Patagonia Sur boasts an impressive list of board members and advisors that includes academic and conservationleaders. Mr. Khedouri said board members only provide one indicator of an organization’s merit.“What really matters is who is really involved,” he said. “With Warren, he really is involved. You are gettingWarren, and to me that is worth more.”The Patagonia Sur properties are in the south of Chile.All Photography Courtesy of Warren Adams.
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