Walmart Heir’s Family Office Commits $100 Million for Debt Swaps

(Bloomberg) — Zoma Lab, the family office of Walmart Inc. heir Ben Walton, has committed $100 million to a new facility to expand the market for so-called debt swaps designed to help finance climate and environmental projects.

The Private Credit Enhancement Facility will aggregate capital from private investors and the money raised will then be used to provide guarantees to back the deals, according to Enosis Capital, a boutique credit fund that developed the structure.

“We’re trying to reach a new asset base of flexible private capital,” Ramzi Issa, managing partner at Enosis Capital and a former UBS Group AG senior banker who helped pioneer such deals, said in an interview. Aside from family offices like Zoma Lab, the goal is also to work with impact investors and philanthropies, he said.

Governments – typically developing nations – use such swaps to refinance debt on better terms and direct savings toward environmental projects. Over the past five years, the arrangements have created more than $1.4 billion in funding for nature projects and provided more than $2 billion in additional debt savings for developing countries, according to Enosis.

The products have also attracted interest from Wall Street banks keen to generate fees from advising on or structuring the deals. JPMorgan Chase & Co. entered the market last year, and Citigroup Inc. is working on a transaction in Ukraine tied to rebuilding the economy, not nature, Bloomberg has previously reported. Other banks to have entered the market include Standard Chartered Plc and Mitsubishi UFJ Financial Group Inc.

Debt swaps rely on guarantees or insurance from third parties to help keep down the borrowing costs of the governments doing the deals. Such credit enhancement has typically been provided by the US International Development Finance Corporation, an American government agency, and by multilateral development banks like the Inter-American Development Bank and World Bank.

However, the future involvement of some of these public institutions is uncertain due to the Trump administration’s decision to withdraw overseas development finance.

“Private capital must play a more prominent role to take this market to the next level,” said Issa. “That’s exactly what the private credit enhancement facility is built to do.”

Walton is the grandson of Walmart founder Sam Walton whose descendants now comprise the world’s richest family, according to the Bloomberg Billionaires Index. Some family members and the Walton Family Foundation have made conservation and the environment a core focus of their philanthropy. Walton’s cousin, Lukas Walton, helped guarantee a similar swap for the Bahamas last year through his climate-focused group, Builders Vision.

Enosis is partnering with the Debt for Nature Coalition, a group of nonprofits that includes the Nature Conservancy and Conservation International. The coalition has developed a pipeline of deals across Africa, Asia and Latin America that they say could unlock up to $3 billion in funding for nature projects by 2030. Enosis aims to deploy more than $1 billion in guarantees over the same period to support such projects.

“Credit enhancement is one of the tools within our foundation that I am most bullish about,” Ben Walton, co-founder of Zoma Lab with his wife, Lucy Ana Walton, said in a statement. The instruments help put capital to work “double time,” he said.

–With assistance from Devon Pendleton.

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