A timberland fund targeting plantation forestry assets in Africa and Latin America has secured soft commitments of $50 million from investors, including the European Investment Bank.
The fund is managed by Arbaro Partners, which is a team sourced from Finance in Motion, an impact investment advisor part-owned by Deutsche Bank, and German forestry consultant and manager Unique.
The fund is targeting $200 million and is expected to hold a first close on $100 million in the second quarter. The fund will have an investment period of four to five years, and will last 15 to 16 years following the first close.
It has hired Hana Skelly, formerly director for forestry, renewable energy and agriculture investments at Finnfund, to manage the fund, beginning in the second half of the year. She has specialised in sub-Saharan African investment.
Finance in Motion will monitor the sustainability of projects.
Arbaro will invest in at least eight forestry projects, and is targeting an IRR of 13 percent from this fund. It also plans to sequester over 20 million tons of carbon dioxide, according to a press release.
The managers are targeting greenfield projects as well as existing companies and forests, and will consider alternative investment streams such as timber processing and silvopasture systems, which combines grazing and forestry.
Unique was founded 18 years ago and has 15,000 hectares of Forestry Stewardship Council-certified forest plantations and natural forests under management. It has offices in Germany, Paraguay, Uruguay and Uganda. Arbaro Partners will target assets in those countries, as well as other regions where the management team has offices, including Ethiopia and Chile.