Are Korean LPs poised to become big timberland investors?

Stafford Capital Partners’ Stephen Addicott says NPS’s $150m commitment to the firm’s forestry fund could ‘underpin future commitments from other South Korean pensions.’

The past few weeks have brought developments that suggest South Korean institutional investors are going to be worth keeping an eye on for significant future investments into timberland.

The ball got rolling on February 18 when Stafford Capital Partners announced it had taken a $150 million commitment from the 833 trillion won ($738 billion; €613 billion) National Pension Service of Korea.

Stafford’s timberland managing partner Stephen Addicott could not confirm to Agri Investor if this was NPS’s first commitment to a dedicated forestry vehicle but said “they have been looking at the timber sector for a number of years.”

“It’s nice to see NPS make such a large commitment, which I think will underpin future commitments from other South Korean pensions,” he added.

The following week, the CIO for South Korea’s $15 billion Public Officials Benefit Association (POBA) Dong Hun Jang told sister publication PERE, that the pension was seriously considering an investment into timberland.

“This year we are considering very seriously… affordable housing [in North America] and farmland and timberland, which is more global,” he said.

The pace and scale of POBA’s forestry ambitions are as yet unknown. And much like NPS, POBA’s desire to invest in forestry will have been informed by at least of couple of years’ worth of research and is not simply a knee jerk reaction to NPS’s move.

Nevertheless, “this is something that’s been building over several years,” said Addicott, who expressed little surprise at POBA’s interest in the sector.

One of the more notable details from the statement announcing NPS’s investment into the ninth iteration of Stafford’s flagship timberland vehicle, was a line which said the two entities had “formed a new partnership” as part of the commitment.

Addicott said the partnership does not “move beyond that initial fund commitment, but as we know with a lot of large long-term investors, they look to develop those relationships over a long period of time – we are hopeful we can continue it beyond SIT IX.”

Stafford’s forestry team will no doubt be aided by the fact the firm opened a new office in Seoul at the start of 2019. In that sense, it has got the infrastructure in place should a long-term association between the country’s pension funds and the timberland asset class prove to be on the cards.