SAO PAULO, April 7 (Reuters) - Reforestation startup

Mombak has secured 100 million reais ($17.8 million) in a deal

with Santander Brasil and Brazilian development bank

BNDES, it said on Monday, eyeing rapid growth in the carbon

removal market.

Mombak, which buys degraded land from farmers and ranchers

or partners with them to replant native species in the Amazon

rainforest, will be the first to fund a reforestation project

with the backing of the Brazil's "New Climate Fund".

Brazil's government launched the 10 billion-real initiative

in 2023 to finance climate-related projects. Santander is

serving as financial intermediary for the deal, underscoring

growing interest from private lenders in the nascent sector.

BNDES had offered a credit line for up to 160 million reais

to Mombak in August, but the startup needed a financial agent

providing required guarantees to access the capital.

"There is a challenge between getting this approval and

actually being able to use the capital. We are reaching a very

important milestone," Mombak co-founder Gabriel Silva said in an

interview.

Mombak currently has 45,000 acres under management, an area

three times the size of Manhattan, and by June expects to have

planted 8 million trees in the world's largest rainforest.

By turning degraded land into forests, the company is

working to generate "carbon credits" that companies can buy to

offset their greenhouse gas emissions.

Mombak, which has deals with buyers such as Microsoft ( MSFT )

, Google and McLaren, has inked $150 million

worth of carbon removal offtake contracts - a figure it expects

to triple or quadruple this year, CEO Peter Fernandez said.

Some firms in Brazil's nascent carbon market have complained

of difficulty getting loans to reduce capital costs and finance

operations, as many investors still see it as risky.

BNDES director Tereza Campello said the Mombak deal

should set a precedent helping to ease some of those concerns.

The bank sees Brazil, home to nearly 60% of the Amazon

rainforest, as well positioned to be a leading player in carbon

offset markets.

"This is the role of a development bank. We are taking the

initiative," Campello said in an interview. "This deal shows the

market is viable and that not only BNDES believes in it, but

other financial institutions too."

Santander sustainability head Leonardo Fleck said fresh

funding reflected an increasingly established market in Brazil.

"Capital is flowing, companies are planting and getting

offtake contracts with large global firms. I see it a lot like a

puzzle - you start to fit the pieces together."

($1 = 5.6321 reais)