GEF makes final investment from Africa forestry fund – exclusive

The Global Environment Fund is also raising a African Sustainable Forestry Fund II, which could hold a first close later this year.

Alternative investment management firm the Global Environment Fund (GEF) has made its eighth and final investment from its Africa Sustainable Forestry Fund. It made a co-investment in Compagnie des Bois du Gabon (CBG) with the Grantham Foundation for the Protection of the Environment, GEF managing director Gordon Carrihill told Agri Investor.

GEF are also raising a African Sustainable Forestry Fund II, and could hold a first close later this year. The amount invested by the GEF or GFP in CBG was not disclosed.

The first African Sustainable Forestry Fund is now fully deployed, except for some funding held in reserve for follow-on investments, Carrihill said. The fund’s investors are entirely development finance institutions (DFI) including CDC, International Finance Corporation, German DFI Deutsche Investitions- und Entwicklungsgesellschaft, Proparco, the Swiss Investment Fund for Emerging Markets and the African Development Bank, although a second fund could see a wider pool of investors including pension funds, Agri Investor previously reported.

CBG manages 568,543 hectares of Forest Stewardship Council-certified, vertically integrated tropical forest near the southern coast of Gabon. It is the first natural forest investment the fund has made, with previous investments focusing on plantation forests.

“We looked at a large number of natural forest investments for this fund, as investing in natural forest was within our remit, but none of them was good enough on a financial or investment front. This is the first one we’ve seen that we are very pleased with,” said Carrihill in a phone interview.

CBG currently harvests approximately 130,000 cubic metres per year mixed tropical hardwood species such as okoumé, azobe and gombe, according to a GEF press release.

GEF invests in clean energy, resource efficiency, environmental services and sustainable resource management. It divides its investments into three classes: private equity, real assets, which includes timberland, and infrastructure. GEF also has timber investments in South Africa and Swaziland.

The fund manager is in the process of raising a second Africa Sustainable Forestry Fund, which was initially intended to hold its first close in 2015, as Agri Investor previously reported. African Sustainable Forestry Fund I initially had a target of $250 million, according to SEC filings. It had raised $160 million by November 2014, but GEF could not confirm the total amount raised to date in time for press.

The Grantham Foundation is a private foundation investing in solutions for urgent environmental issues.