Criterion Africa Partners takes minority stake in Form Ghana

The asset manager is also lining up an investment into a 'large fully integrated wood products company in the next several weeks,' confirmed managing director George McPherson.

Criterion Africa Partners has made a $17.1 million investment in reforestation company Form Ghana, which is a subsidiary of Dutch holding company Sustainable Forestry Investments.

Form Ghana owns and manages timber plantations in the Ghanaian city of Berekum and the township of Akumadan, which are planted with 10,000ha of teak and indigenous trees.

The company is the product of a 2001 pilot project led by Sustainable Forestry Investments. The holding company also houses SFI Tanzani, which is a sisal company based in Tanzania.

A statement from Criterion Africa Partners said Form Ghana is preparing to enter a new phase of commercialization and revenue growth, as its forestry assets mature.

The business recently completed its first sales of teak following a thinning operation – details about the transaction were not disclosed.

Managing director George McPherson declined to disclose any details about future sales projections but he told Agri Investor timber sales will ramp up from a very low base as the plantation matures in the coming years.

The company also markets carbon credits directly to buyers, which have been generated through tree planting activities in the last two decades.

Capital was deployed from Criterion’s 2018-vintage Africa Sustainable Forestry Fund II, which closed on $115 million in 2020.

The firm anticipates 75 percent of the fund will be deployed by Q2. McPherson confirmed Criterion has “passed on several transactions due to unrealistic valuation and return expectations. We have not invested in any large standalone wood processing facilities but have made investments in smaller platform businesses that have the potential to scale quickly,” he said.

“We will announce an investment in a large fully integrated wood products company in the next several weeks. We have invested in and continue to be excited about developing agriculture alongside and within existing plantation forestry assets and we anticipate investing additional growth capital there as well.”

Fund II is exclusively backed by seven development finance institutions, including FinDev Canada, CDC Group, African Development Bank and SIFEM, the last three of which are return investors. The vehicle will target assets located in sub-Saharan Africa, with a focus on Eswatini, Gabon, Ghana, South Africa, Tanzania, and Uganda.

The asset manager has completed a series of exists from its $160 million Fund I in the last two years. It sold a 8,500ha pine and eucalyptus timber asset in Uganda’s Kikonda Forest Reserve to Nile Fibreboard in December 2020. The deal’s financial details were undisclosed.

Portfolio company Peak Timbers sold its forestry and sawmilling business to TWK Group subsidiary Shiselweni Forestry Company in a $39 million deal in April 2021. And in June 2022, Criterion sold its 49 percent stake in Gabonese forestry company Compagnie des Bois du Gabon to TotalEnergies in another undisclosed deal.