New Forests’ $490m raise marks third fund’s first close

The fund will employ a long-term value add strategy investing in a portfolio of hardwood and softwood plantation assets in Australia and New Zealand.

Australian fund manager New Forests has raised A$660 million ($491.7 million; 464.4 million) to launch its Australia New Zealand Forest Fund 3 (ANZFF3), which sources told Agri Investor marks the fund’s first close.

New Forests’ third investment fund dedicated to Australian and New Zealand forestry will employ a long-term value add strategy investing in a portfolio of hardwood and softwood plantation assets in the two countries.

The A$707 million ANZFF2 predecessor fund is now approximately 80 percent invested and expected to be fully invested by January 2017, after which New Forests will begin to deploy ANZFF3, sources said.

New Forests announced the fund launch last week and declined to comment further, but its Timberland Investment Outlook looking forward through 2019 suggested that returns for forestry investment in Australia and New Zealand will be around 7 percent to 8 percent (net of inflation and net of fees) in the coming years.

“As a long-term investor, New Forests’ goal is to create an environment where forestry can prosper and where we can jointly deliver strong and stable returns to our clients and positive outcomes for the communities where we operate,” CEO David Brand said in a statement. 

In addition to the plantation asset focus, the fund mandate allows for investment in processing or infrastructure facilities such as sawmills, ports, and bioenergy facilities, and it will be managed “to reflect New Forests’ longstanding commitments to sustainable forest management, third-party forest certification, and responsible investment”, the statement said.  

“Forestry is also an increasingly important asset class as investors seek to decarbonise investment portfolios and play a part in the emerging bio-economy,” Brand said. “High-quality timber plantations in the southern hemisphere and tropical regions will be central to the ability of the international forestry sector to grasp this opportunity.”

New Forests’ clients include pension funds, superannuation funds, and other institutional investors. The company manages more than A$2.5 billion of investments in Australia and New Zealand and has funds, assets under management and committed capital of more than A$3.6 billion globally.

The company’s investments and operations include more than 780,000 hectares of plantation forestry and land as well as the Timberlink wood processing, sales, and distribution business, the forest management business Forico, and the international timber marketing business New Forests Timber Products.

Mark Rogers, New Forests’ Managing Director for Australia and New Zealand, will have oversight of the new fund’s investment programme, leading a team of investment and forestry professionals in Sydney, Melbourne, and New Zealand.