Deals

Criterion Africa Partners offloads forestry assets for $39m

The sub-Saharan forestry investor has been steadily divesting its 2010 vehicle and has raised $115m for a successor fund, which reached its final close in April 2020.

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Criterion Africa Partners portfolio company Peak Timbers has sold its forestry and sawmilling business to TWK Group subsidiary Shiselweni Forestry Company, as it continues to divest the 2010-vintage Africa Forestry Fund I.

TWK’s interim financial results, published on April 7, show that “the consideration for the assets is approximately R574 million ($39 million; €33 million). The fair value of the assets acquired and liabilities assumed is R754 million and equates to a bargain purchase of approximately R172 million.”

The sale includes 26,752 hectares of land, 17,338 hectares of standing timber and a sawmill operation, all of which are based in the East African country of Eswatini (formerly Swaziland).

Criterion African Partners managing director George McPherson declined to disclose the original 2012 purchase price of the Peak Timber assets, but told Agri Investor in an email that the firm “is satisfied with the sale price secured with TWK.”

“The investment team realizes that given the quality of the asset as it stands today versus where it was in 2012, TWK is acquiring one of the most attractive and productive brownfield forestry assets available anywhere in Africa,” he added. “CAP expects the Peak Timbers acquisition to be highly beneficial to TWK in the coming years as the Peak forestry assets reach full maturity and full rotation.”

Peak Timbers’ eucalyptus plantation currently produces 350,000 cubic meters of timber per annum, which is expected to increase to more than 550,000 cubic meters at full maturity. A timeframe was not given for when this would be achieved.

The company supplies utility poles, lumber, mining timber, pulpwood and biomass across Africa’s markets.

CAP portfolio company Global Woods sold its 8,500-hectare pine and eucalyptus timber asset in Uganda in December 2020. Financial details were undisclosed.

The remaining assets in the $160 million Africa Forestry Fund I include South African forestry and saw mill operator MTO Group, Tanzania teak plantation and sawmill operator Kilombero Valley Teak Company, and forestry products company Compagnie des Bois du Gabon.

The private equity firm closed its second dedicated forestry fund on $115 million in April 2020, which took all of its commitments from seven development finance institutions, including FinDev Canada, CDC Group, African Development Bank and SIFEM – the latter three of which were return investors.