Asset manager Gresham House has launched a €200 million forestry fund that has received a €25 million cornerstone investment from the Ireland Strategic Investment Fund.
The Irish Strategic Forestry Fund has taken €35 million in total from cornerstone investors and will invest in greenfield and brownfield assets as it seeks to build out a 12,000ha portfolio upon full deployment.
The vehicle has a 15-year term and two five-year extensions, Gresham House forestry managing director Olly Hughes confirmed to Agri Investor.
Hughes declined to disclose target return rates but confirmed that returns will be generated through traditional areas such as growth and sale of timber, and an “uplift in value from converting low-grade land into new woodland.”
The managing director added that the firm is also looking at the “potential upside from carbon sequestration and the generation of forest carbon units and other natural capital opportunities.”
Hughes clarified that “these will add additional value and return and are not assumed in the initial return expectations.”
Gresham House is also currently raising capital for its Forest Growth and Sustainability Fund, which was launched in June 2021 and had a £200 million ($237 million; €226 million) second close in December 2021.
Hughes described the fundraising market for timberland vehicles as “strong,” and said the UK and Europe remain the key regions from which it intends to source capital.
Gresham House said the Ireland Strategic Investment Fund will make a “significant contribution” to Ireland’s Climate Action Plan, one of the main targets of which is to change the nation’s land use and increase annual afforestation rates to 8,000ha per annum from 2023 onwards.
The firm has struck an operational management agreement with Ireland’s state-owned commercial forestry business Coillte, which Gresham House hopes will see the development of the fund benefit from its long track record in the Irish forestry sector.
The vehicle will be managed from the firm’s Dublin office, with Joe O’Carroll acting as investment director.