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Briefing: Foresight’s listed forestry vehicle acquires £113m of seed assets

The firm has been developing its natural capital strategy for the past three years and chose to pursue a listed forestry vehicle in 2021 to accommodate a wider pool of LPs.

Foresight Sustainable Forestry Company completed the acquisition of its seed assets from the firm’s Inheritance Tax Solution at a total cost of £113.4 million ($148 million; €134 million).

A bit of background

Foresight is a longstanding investor in the UK’s forestry sector but had only done so through its inheritance solution. That solution was open exclusively to individual investors seeking to benefit from the asset class’s wealth preservation credentials.

Keen to tap into the wider pool of investors that are now clamoring for natural capital assets with strong ESG credentials, the firm decided last year to pursue a first-of-its-kind listed UK forestry vehicle.

The listed entity can continue to cater to its individual clients, as well as being able to take commitments from a wider pool of LPs including institutional, family office and corporate, among others.

Why it matters

With the IPO of Foresight Sustainable Forestry Company raising £130 million in November 2021 and the investment trust successfully listing on the London Stock Exchange, the assets transfer represents a materially significant milestone in the vehicle’s development.

The transferred assets include 15 forestry sites, 11 afforestation sites and one site which is both afforestation and forestry. The portfolio extends over 8,117 hectares and is spread across Scotland (80 percent), Wales (13 percent) and England (7 percent).

As part of Foresight’s evolving natural capital strategy, the firm last year signaled its intent to enter food and agriculture investments for the first time.

Some of the food and ag areas into which the firm could invest include onshore recirculating aquaculture systems, greenhouses and vertical farming assets, partner Dan Wells told Agri Investor.

Wells said these types of food production systems, which are not dependent on good weather conditions for their yield, can use little to no pesticides and have the potential to be powered with renewable energy, “could become infrastructure assets in future.”