CAP exits Gabon forestry asset to TotalEnergies

Criterion Africa Partners sold its 49 percent stake in Gabonese forestry company Compagnie des Bois du Gabon to TotalEnergies, a French energy company expanding production of carbon credits. Financial details were undisclosed.

CBG is an integrated forest products company that manages 596,000 hectares of timberland near the Loango and Moukalaba Doudou national parks in Gabon. It provides hardwood lumber for local and export markets and uses its own processing facilities to produce logs used by Europe’s largest plywood producer.

“We weren’t necessarily in a rush to exit the asset, but given the discussions and complexion of the transaction, it made sense for us, as well as for the majority shareholder, who will continue to manage the company with Total as their partner,” CAP managing director George McPherson told Agri Investor.

McPherson said CAP’s $16 million investment into the Port Gentil-headquartered company came in 2016 and was the last from the Maryland-headquartered firm’s first fund, which closed on $160 million in 2010.

In its statement, Total said it planned to develop credits derived from reduced impact of forest operations, reforestation, agroforestry and conservation of natural forests now operated by CBG. Under its TotalEnergies Nature Based Solutions initiative, the company plans to deploy $100 million annually through 2030 into projects capable of producing carbon credits to offset its Scope 1 and 2 emissions.

Total also highlighted that properties managed by CBG are habitats for elephants, great apes, reptiles and insects and a stake in the company provides an opportunity for it to participate in the national “Green Gabon” initiative.

“We are also particularly delighted to extend our activities in Gabon to sustainable and responsible forest management, after more than 90 years of investment and economic activity in the exploitation of the country’s hydrocarbon resources,” TotalEnergies president of exploration and production Nicolas Terraz said in the statement

CAP has not traditionally focused on monetizing carbon assets related to its forestry investments, but has started to explore such possibilities in response to investor interest, McPherson said.

“Africa is becoming seen as a significant part of the overall quest for net zero. We’ve been receiving in-bound inquires for a couple of years now from all sorts of corporate players and sovereign wealth funds looking to partner with us to help them achieve these objectives,” he explained.

“While we are enthusiastic about this in-bound interest, it’s not as easy as perhaps some of these corporates and governments and sovereign wealth funds think that it is, but we think that we know how to do it.”

CAP is a spin-out from the Global Environmental Fund that maintains an office in South Africa and invests mostly in rehabilitation of existing plantations, downstream manufacturing and wood-based energy generation. In April 2020, it closed its Africa Forestry Fund II on $115 million after drawing commitments from The Grantham Foundation, FMO and the Swiss Investment Fund for Emerging Markets, among others.

In December 2020, its portfolio company Global Wood sold an 8,500-hectare timber property in Uganda to a local wood manufacturer and in April 2021 another portfolio company, Peak Timbers, exited a forestry and sawmilling business in Eswatini (formerly Swaziland).

McPherson said the firm’s next vehicle will likely have a stronger focus on the carbon potential of its investments and benefit from momentum in African timber markets demonstrated by recent transactions.

“I think it will be a much different fundraising story the next time out than it was in 2018. Having exits is, first and foremost, the most important thing for any commercial or DFI investor,” he added. “Layer on the desire for carbon and you take that to the next level in terms of commercial interest in the US as well as in Europe.”