Brazilian investment bank BTG Pactual has just closed its first timberland fund on $860 million, exceeding its $750 million target. Gerrity Lansing, head of timberland merchant banking at BTG Pactual, talks to Agri Investor about the fundraising process.
How was the fundraising experience for Brazil Timberland Fund I?
The fundraising for this particular fund was about 18 months long and we exceeded our target by a bit. Our investors consist of a concentrated group of both Brazilian and international institutional investors and we are very pleased with the amount raised, and in particular, the quality of the limited partner base.
What is the deployment period of the fund and the acquisition pipeline?
To date, we have invested less than 10 percent of the fund. We have four years to deploy the capital, so we are being very patient with our pipeline. Brazil will be the primary target, but we could invest capital in Chile and Colombia. Other countries also present possibilities, including Uruguay. We do not have a specific percentage allocation for these countries; our primary focus is Brazil.
There are rumours that the Brazilian government is considering easing foreign land ownership restrictions to boost investment in agriculture and forestry. How would this affect BTG’s investment strategy in the area?
Restrictions on foreign ownership of rural land have been in place in Brazil for almost five years and there is always speculation as to whether or not this restriction will continue or be lifted to some degree. For context, countries such as Uruguay, Colombia, Hungary and Australia have all tightened their restrictions on foreign ownership in recent years. We aren’t placing any bets, and don’t have a view on what will happen with this issue in Brazil, but we certainly do see this trend in restriction increasing elsewhere as well.
For BTG Pactual, we have not seen a quantifiable impact on our investments as a result of the restrictions. Certainly, if the restrictions are eased, there will be higher interest from non-Brazilian citizens to invest in this space. Of course, having more people that are willing to buy does not mean there will be more people willing to sell at the same time.
How is BTG’s general view of the timberland market in Brazil?
Brazil has some significant biological and technological advantages that other geographies can’t replicate. The climate is very conducive to growing timber, and the country’s industrial facilities tend to be best in class on a relative basis to their global peers. We feel positive about the continued development of this sector in the country.
What is BTG’s next focus?
Our focus after this capital raise will be back in the US timberland market, where we see investment opportunities increasing and where over 50 percent of our assets under management are invested.