New Forests hits $120m first close on Tropical Asia Forest Fund 2

Sydney-headquartered New Forests is targeting $300 million for the vehicle, which will invest in assets in Southeast Asia.

New Forests has secured a range of commitments from investors in Australia, Europe, Japan, the Philippines and the US to reach a first close of $120 million on its Tropical Asia Forest Fund 2.

TAFF2 is a closed-end vehicle that focuses on sustainable plantation forestry investments in Southeast Asia. It is a successor to the firm’s first Tropical Asia Forest Fund, which closed on $170 million in 2012.

A spokesperson for New Forests confirmed the second fund is yet to make any investments but has a pipeline of opportunities and will begin deploying capital now that a first close has been reached.

New Forests will continue raising capital over the course of 2022 before an anticipated second close this year, with a final fundraising goal of $300 million.

The firm, which is headquartered in Sydney and has an office in Singapore, said in a statement that it expects the fund to invest in a diversified portfolio of assets in Malaysia, Indonesia, Vietnam, Thailand, Laos and Cambodia for end markets including timber, rubber and carbon.

LPs involved in the first close include the Asian Development Bank, the Australian Climate Finance Partnership, the David and Lucile Packard Foundation, Sumitomo Mitsui Trust Bank, Temasek and TotalEnergies.

TAFF2 will use a blended finance structure, allowing New Forests to invest in impact activities focused on climate action, community engagement and biodiversity conservation alongside plantation forestry management.

“New Forests’ objective is to demonstrate that asset management integrating commercial forestry investments with activities such as ecosystem restoration, reforestation and community forestry will lead to better returns, long-term sustainability outcomes, and operational resilience,” the firm said in a statement.

Commenting on the close, New Forests chief executive officer David Brand said: “Asia is central to the economic and sustainability transformations happening in the 21st century. Asia has an important role to play in aligning its growth with climate-positive, nature-positive and sustainable development outcomes.

“The TAFF2 investment strategy has been developed to invest capital in these transformations, using the blended finance structure to mobilize more capital towards high social and environmental impact outcomes.”

New Forests last year partnered with three European development finance institutions to launch an investment fund focused on the sustainable forestry sector in sub-Saharan Africa, as it continues to extend its footprint in developing markets. That fund aims to raise up to $500 million over the next three to five years.