New Forests buys Tasmanian forestry in A$62.5m deal

New Forests has purchased more than 18,000 hectares of radiata pine plantations in Tasmania, from an Australian subsidiary of listed Norwegian pulp and paper company Norske Skog.

The Sydney-headquartered fund manager paid A$62.5 million ($42 million; €38 million) for the plantations.

New Forests made the acquisition through Australia and New Zealand Forest Fund 3, a closed-end A$873 million vehicle that closed in 2018.

The plantations have traditionally serviced around two-thirds of Boyer Mill’s annual consumption of 550,000 tonnes. New Forests will enter into a contract to supply 360,000 tonnes annually to the mill, commencing at completion of the transaction, and the mill will continue to be operated by Norske Skog. Other existing contracts related to the estate, including forest harvesting and haulage, will transfer to New Forests with the sale.

New Forests managing director for Australia and New Zealand, Mark Rogers, said in a statement: “This acquisition is a good outcome for New Forests’ ANZFF3 and its investors, who are seeking a diversified exposure to the mature, professionally managed timberland markets of Australia and New Zealand. The purchase brings added geographic and market diversity to the fund, which will also benefit from a secure, long-term offtake agreement to the local mill.”

Norske Skog president and CEO Sven Ombudstvedt said: “The sale of the Tasmanian forest is a continuation of Norske Skog’s strategic asset review and is in line with Norske Skog’s communicated strategy of optimizing its portfolio and [to] seek value enhancing transactions. The sale is part of the group’s long-term strategy where released funds will enable the necessary conversions, investments in new green projects and investor policy to be fulfilled.”

The deal is expected to close in mid-2020 and is subject to Foreign Investment Review Board approval.

ANZFF3 reached approximately 50 percent deployment in February 2019 after it purchased Hikurangi Forest Farms in New Zealand. New Forests had not responded to a request to comment on what stage deployment has reached following this latest acquisition.