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Asian plantation firm mulls IPO – exclusive

Asia Plantation Capital may list its investment management business and its own forestry assets but some $500m of third-party AUM would remain private.

Asia Plantation Capital (APC), the forestry investment management company and oud oil producer, is considering an initial public offering next year, according to Adam Sprague, director of strategy.

Sprague and his colleagues are still discussing the idea but the IPO would list the management company and its own forestry assets as a means to shore up capital for expansion, he told Agri Investor. Third party investors’ assets under APC’s management, that total around $500 million, would not be listed.

APC launched in 2008 out of the privately owned plantations in Sri Lanka of the management team. The firm now manages plantations across the US, Africa, India, Laos, Thailand, Vietnam, Indonesia and is expanding into Malaysia.

The firm’s plantations grow aquilaria trees for the most part – a tree that produces agarwood, which has many uses – but also teak and cash crops. The crops are inter-planted with the trees as a means to provide investors with regular cash flows, but also as a means to manage the soil.

“We inter-plant aquilaria with a lot of banana that adds nitrogen to the soil,” said Sprague. “This helps the soil but also provides some shade cover to the saplings when they are still young. It depends which species you plant but generally the closer you plant trees to other things, they will tend to compete with each other and the stronger ones win out.”

Harvesting the crops planted between the trees can be a bit more labour intensive, however.

APC’s investor base ranges from small individual investors that might own as little as five trees, to large institutional investors, such as pension funds that allocate a portion of their portfolios to APC. Each investment is managed separately and the time frame is usually around five years – the minimum amount of time it takes for the trees to grow, according to Sprague. The majority of investors are based in Asia although the investor base is global.

The exit route for investors depends on the species of tree they own but for aquilaria it is the harvesting of the tree and sale of oud oil – this is produced by inoculating the trees to produce resin and agarwood. This could give investors a return of around 15 percent, said Sprague although few investors’ plantations have reached maturity yet, he added.

APC owns and has partnerships with a range of supply chain firms; it recently announced a collaboration with Vanadurgi Agarwood India, India’s largest agarwood plantation group.