Finnish UPM sells over 21,000ha of timberland to United Banker

The sale is part of a long-term partnership between one of Finland’s biggest forest owners and the investment group, as the country sees increased demand for wood-based products.

Finnish forest industry company UPM has sold over 21,000 hectares of timberland to Finnish investment group United Banker’s forest funds, bringing total sales to over 400,000 hectares.

The transaction, located in the Kainuu region, took place at the end of December for an undisclosed amount to UB Timberland and UB Nordic Forest Fund III, which are worth around €200 million, United Banker said.

As part of the agreement, UPM will manage United Bankers’ forest property, with the latter committed to selling a significant amount of wood to UPM annually. UPM’s forest director, Sauli Brander, said: “A high proportion of forests owned by United Bankers’ forest funds is managed by UPM based on the long-term partnership. The target is to increase the value of forests through sustainable operations.”

UPM is one of the biggest forest owners in Finland, with 514,000 hectares of forest land in the country, 75,000 in the US and 225,000 in Uruguay. United Bankers, for its part, is one of the fastest growing players in the forest estate market, with around 60,000 hectares of forests.

Erno Järvinen, research manager at the Central Union of Agricultural Producers and Forest Owners in Finland, told Agri Investor: “The emergence of forest funds has been the newest phenomenon on the forest estate markets. There are currently several key forest funds like UB Forest Fund, eQ Metsa, Dasos Capital, OP-Forest Owner Fund, S-Metsarahasto, Taaleri, FIM. UPM has been the biggest seller, with sales of over 400,000 hectares of its forests in the past decade, located mainly in northern Finland, to domestic and foreign funds, and some to private investors.”

Järvinen added that UPM had also sold land to forest owner Finland Tornator, a specialist in sustainable forest management. Tornator – the third largest landowner in Finland – owns over 674,000 hectares of forest land, operating mainly in eastern Finland, with forests also in Estonia and Romania and a core business in wood production and the sale of cutting rights.

Explaining the market dynamics, Järvinen said: “The forest sector’s investment outlook is currently very positive compared to previous years, mainly as a result of increasing demand for all kinds of wood-based products in construction, hygiene paper, packaging, forest estate. Prices are moving upward, with the increased industrial investments having a positive impact on estate prices. The positive situation is also partly down to less regulation and low interest rates, compared to 10 years ago when there was declining demand for printing and writing paper. There are also no restrictions on foreign ownership of timberland.”