Exclusive: New Forests nears full deployment on Asia fund

TAFF, a $170m vehicle backed by nine LPs, is close to 85% invested after taking an additional stake in a Malaysian eucalyptus plantation.

Australia-based New Forests has injected further equity in its first Asian forestry investment, a eucalyptus plantation business in Sabah, Malaysia.

The firm is investing in Hijauan Bengkoka through the $170m Tropical Asia Forest Fund, a vehicle closed in 2012 that New Forests bills as the first fund focused on Asian sustainable forestry. Agri Investor understands that TAFF is now around 80-85 percent deployed, and that its investment period has ended. The firm is interested in continuing investments in the region, according to people familiar with the firm.

New Forests declined to comment on fund deployment and future product launches.

However, David Brand, chief executive of New Forests, told Agri Investor that the firm sees “the bulk of demand growth for timber and fibre to be in Asia over the next 30 years, and the supply growth for that market demand will come from intensively managed timber plantations in the Southern Hemisphere and tropics.”

TAFF, a 10-year vehicle with possible two-year and one-year extensions, is assessed against a financial return benchmark that New Forests declined to disclose as well as IRIS metrics that measure impact performance. Its investor base includes nine LPs, comprising three DFIs, two funds of funds and four European institutional investors.

The fund’s latest investment will allow Hijauan Bengkoka to expand and complete a shift towards higher value eucalyptus sawlog production, according to New Forests.

“Asia has a long history of forestry, but much of this has been based on exploiting the natural forest, and as the economically accessible forests are depleted, there is a need for investment in new high yielding timber plantations,” Brand said.

In addition to Malaysia, TAFF is also invested in two projects in Indonesia and Laos. These cover about 150,000 hectares of land, with a goal of establishing 60,000 hectares of certified plantation.