First look

Interest in timberland is no ‘fad’

Gerrity Lansing, head of BTG Timberland Investment Group, is one of the private market industry’s most seasoned timberland investors. His view on the current surge in interest in forestry? It’s here to stay.

“To me, it doesn’t seem like a fad,” said Lansing. “It feels like people are staffing up with investment professionals that have a legitimate interest in the asset class, which is exciting.”

LatAm is the place to be: TIG has a portfolio of roughly 3 million acres, 1.6 million of which is in the US with 1.4 million in Latin America.

Lansing says he expects this to be gradually reversed over the next decade as LatAm receives some of the emerging market allocation that would have otherwise gone to China, with more and more US investors now turning down investment opportunities in the People’s Republic.

Trees also grow faster in South America owing to the climate and soil biology, which means returns from carbon credits and sustainable tree harvesting can be realized sooner.

Partnering with the great and the good: The firm has also struck a series of partnerships in the last two years with a diverse range of stakeholders to support its commercial and environmental activities.

TIG partnered with Canadian pension British Columbia Investment Management (BCI) to create Caddo Sustainable Timberlands, a platform company seeded with 772,000 acres located in East Texas and West Louisiana and plans for continued expansion in the US southeast.

The firm partnered with BCI and Dutch pension APG in 2021 to launch Vista Hermosa, a new company focused on sustainable management of 80,500 acres of timberland in central and southern Chile. BCI and BTG’s separate joint venture, Lumin, announced plans this year to invest $136 million into construction of a sustainable plywood mill in Uruguay.

TIG also partnered with The Nature Conservancy in 2021 to sustainably manage 530,000 acres of timberland owned by TIG to maintain and enhance environmental and financial gains from the assets.

They said it

“The faster a tree grows, the faster it’s going to sequester CO2, so naturally, from a pure climate perspective, the bigger opportunity is in Latin America”

BTG Timberland Investment Group head Gerrity Lansing discusses one of the reasons why LatAm will attract more forestry investment

Sovereign wealth fund

GRAIN questions food security impact of SWFs
Non-profit organisation GRAIN has scrutinized sovereign wealth fund investments in global farmland and agribusinesses. The body said that SWFs “crush real visions of food sovereignty as they take resources away from local communities and push a capitalist, industrialist food system – be it green or not.”

Lay of the land: Barcelona-headquartered GRAIN – which works to “support small farmers and social movements in their struggles for community-oriented and biodiversity-based food systems” – said at least 42 sovereign funds are invested in food, while food and ag represent 2-3 percent of all sovereign wealth fund investments.

SWFs forming the centre of gravity: “A handful of actors form the centre of gravity of global agricultural investing by sovereign funds,” says the report. “They are Temasek and GIC in Singapore; PIF in Saudi Arabia; Mubadala and ADQ in UAE; QIA in Qatar; RDIF in Russia; and COFIDES in Spain.”

Food-supply-guaranteed investments: The report says investments such as QIA’s backing of Glencore “ensures” Qatar will receive “access to grains and shipping services in case of need.”

“Similarly, when Abu Dhabi’s ADQ bought 45% of Louis Dreyfus – the world’s third largest commodity trader – it signed a side deal giving it priority access to food shipments in times of global crisis, as the world experienced recently during both Covid-19 and the Russian invasion of Ukraine.”

Fund chart

White House backs BTG’s LatAm strategy 
BTG Pactual Timberland Investment Group’s (TIG) Latin American reforestation strategy is in line to receive a $50 million debt investment from the US government.

The White House said the US Development Finance Corporation will make the investment to facilitate the vehicle’s target of raising $1 billion.

Plant, protect and restore: The fund aims to protect and restore nearly 300,000 hectares of natural forests in deforested landscapes in Brazil, Uruguay and Chile. It will “plant hundreds of millions of trees in sustainably managed, independently certified commercial forests; improve biodiversity; and support inclusive and equitable community development,” said a statement. The strategy aims to sequester roughly 35 million tonnes of carbon over 15 years.

Conservation International is serving as impact adviser for the strategy to help TIG achieve additional positive environmental, climate and social impacts.

Essentials

City of St Louis needs less volatility 
The Firefighters’ Retirement Plan of the City of St Louis is working with investment consultancy Dahab Associates to add a 5 percent allocation to farmland or timber.

Dahab managing director and chief investment officer Steven Roth told Agri Investor that his firm recommended the allocation in order to dial back the $139 million pension’s exposure to volatility.

High volatility: “We’ve been running this thing pretty high on the volatility spectrum just because it’s a newer plan that was cash-flow positive and checked all the boxes,” said Roth.

“Now that it’s becoming a little bit more retirees, we just want to dial back the volatility a little bit. We can take the illiquidity risk. Timber/farmland typically returns less than public equities, but we’re going to accept that for a little bit less volatility and a little bit more diversification.”

Full story.

Agtech fundraising

CropX Technologies, a digital agronomic farm management company, has raised $30 million in Series C funding. The round was led by Aliaxis, with participation from Edaphon, Finistere Ventures, NTT Finance Corporation, OurCrowd, Reinke Irrigation, Yair Shamir and Victrix.

eniferBio, a biotech start-up developing high levels of protein product for pet food and fish feed, has raised €11 million in a Series A funding round led by Aqua-Spark, with participation from Tesi, Valio, Voima Ventures and Nordic Foodtech VC.

Flash Forest, a drone reforestation start-up, has raised C$11.4 million ($8.4 million; €7.7 million) in a Series A funding round co-led by TELUS Pollinator Fund for Good and OurCrowd.

nZero, a near real-time carbon management and accounting platform, has closed a $16 million Series A funding round co-led by Fifth Wall and an unnamed national US energy company, with participation from Piedmont Capital Investments.

Ebb Carbon, an ocean-based carbon dioxide removal company, recently raised $20 million in a Series A funding round led by Prelude Ventures and Evok Innovation, with participation from Congruent, Grantham and Incite.

Also in the news

Climate funds are a silver lining in black cloud of fundraising
At least 22 climate-focused venture funds have raised a combined $5.5bn since the start of 2022, Venture Capital Journal research shows (Venture Capital Journal).

The Challenge of Blue Carbon
Wetlands store a lot of carbon – but turning that into a business isn’t easy (Nautilus).

UNDP targets ‘tiger ecosystem bond’ to fund conservation activities
Agency looks to sovereigns and MDBs as potential issuers for ground-breaking bond focused on keynote species (Responsible Investor).

Iowa counties install bioreactors, buffers to filter nitrates from water
Counties in Iowa are being encouraged to fund efforts to install bioreactors and streamside buffers on farmland to filter fertilizer-borne nitrates from water (Finance and Commerce).

Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp.