Gresham House Forestry to launch up to four new timber funds – exclusive

The firm has set its sights on two funds that will invest across the UK and Northern Europe, with a further two targeting Australasia and potentially the US, says managing director Olly Hughes.

Gresham House Forestry is set to launch a new UK-focused forestry fund and up to three international funds this year, managing director Olly Hughes told Agri Investor.

The British timberland GP is seeking to launch the funds at the beginning of Q2, but Hughes did not clarify the order in which the vehicles will come to market.

Gresham House Forestry is one of the largest timberland GPs in the UK, with a portfolio of assets covering 140,000 hectares. The firm has delivered IRRs since inception of 12 percent net of all fees.

The UK-specific Forest Growth and Sustainability Fund “will be focusing on a balance of afforestation and commercial forestry, with a strong focus on the afforestation, tree planting, sustainable carbon opportunity,” said Hughes.

The firm’s “international strategy will be made up of a portfolio of separate funds,” said Hughes, with the Australasia Forest Fund pursuing commercial forestry opportunities in the region. The firm will also launch the second iteration of its Forest Carbon Fund, which will target jurisdictions with compliance emissions trading systems, such as New Zealand and California.

“Within the global emissions trading systems, there are compliance systems and there are voluntary systems – New Zealand and California are the two compliance systems,” Hughes explained.  [They have] forestry planted and grown purely for the purposes of carbon sequestration. It will not be harvested and that forestry has a long term aspiration for carbon sequestration.

“So, when we’re saying investing in carbon, there will be certain investment opportunities which will be purely driven by carbon. There’ll be other investment opportunities which are driven by a combination of carbon and long-term timber as well.”

The fourth fund the firm could launch this year will be a Europe Forestry Fund, which will focus on opportunities in Northern Europe. Hughes declined to share return targets for any of the new funds.

Forestry investment director David Gardner, who joined Gresham House in June 2020 from US timberland investment firm Global Forest Partners, will lead the global expansion strategy.

Gresham House completed its first New Zealand forestry acquisition towards the end of last year, details for which have not been disclosed. Hughes did confirm, however, that the asset “covers a number of forests with a particular focus on forest carbon.”

Total assets under management for the Gresham House business as a whole, which includes assets managed by its real estate and infrastructure divisions, was £3.9 billion ($5.44 billion; €4.52 billion) as at December 2020.