David Brand
Sydney-based sustainable forestry manager New Forests has raised $660m from international pension funds to invest in new-growth soft and hardwood forests in Australasia. Source: IPE
Capital-raising began 10 months ago for the Australian New Zealand Forest Fund 3 (ANZFF3). The fund closed last week, with investors committing an average $100m each.
David Brand, chief executive at New Forests said: “We have done a lot of work in terms of being able to quantify carbon storage in our forest stocks in the forest, and how they create a net carbon balance for our investors.
“Many of our investors are trying to quantify total greenhouse gas emissions associated with their portfolios. Forestry assets can help contribute positively to that work.”
Mr Brand said forestry, in addition to decarbonising investment portfolios, played a part in the emerging bioeconomy.
New Forests is now completing investments via ANZFF2, which raised $707m in 2014. It is the largest forestry investor in Australia, accounting for 40% of hardwood chip exports from Australia.
Mr Brand said the company would generate revenue totalling $600m this year.
“Our eucalyptus wood chip is almost entirely sold out to China to the end of 2017,” he said, adding that the “soft” Australian dollar was making the company more competitive, as its markets were priced in US dollars.
“We also export hardwood and softwood logs to China for the manufacture of furniture, plywood and concrete formwork, used in construction,” he said.
New Forests sells logs to its domestic sawmills in Australia and New Zealand to produce structural lumber for house building.
ANZFF3’s mandate allows for investment in processing or infrastructure, such as sawmills, ports and bioenergy facilities.
New Forests, founded in 2005, launched its first fund, known as ANZFF1, in 2010 and has since raised a total of $1.85bn for its ANZFF series – entirely from offshore defined benefit pension funds.
Its funds have terms of 10-16 years, with fund managers having the option of extending after year 10 until year 16, when vehicles are liquidated.
“We have a three-strategy business,” Mr Brand said. “We have the Australian New Zealand forest fund series and the Asian forest fund series to invest in Malaysia and Indonesia.”
The company aims to launch a new Asian forest fund early next year.
“In the US,” Mr Brand said, “we have funds linked to both timber production and carbon offset under the California Green House Gas Emissions Trading Scheme.”
New Forests manages around 780,000 hectares of land and plantation valued at more than $2.5bn in Australia and New Zealand. In total, it manages committed capital of more than $3.6bn globally from pension and superannuation funds and other institutional investors.
