New Forests holds A$450m first close on ANZ Landscapes and Forestry Fund

New Forests secures A$75m commitment from the CEFC for ANZLAFF, alongside investment from AP2, BVK and others.

New Forests has held a first close on A$450 million ($304 million; €277 million) for its Australia New Zealand Landscapes and Forestry Fund.

The Clean Energy Finance Corporation has committed A$75 million to the fund and other investors include Swedish pension fund AP2, German pension group Bayerische Versorgungskammer, and unnamed Australian and German insurance companies.

The 15-year closed-end fund is New Forests’ fourth vehicle focused on Australia and New Zealand, and launched in December 2022 with a target of A$600 million. New Forests CEO Mark Rogers told Agri Investor at the time of the launch that the firm had been targeting a final close by the end of 2023.

The fund will target investments in core forestry plantations in Australia and New Zealand, alongside processing and related infrastructure. It will also have some exposure to agriculture assets, which will be managed by the team at New Forests’ farmland asset management division New Agriculture.

New Forests said the fund aimed to maximize value from both forestry and agricultural landscapes “while combining additional revenue streams such as carbon, biodiversity and renewable energy such as solar and wind.”

The fund has set targets for carbon abatement including through the conversion of existing plantations from short-rotation hardwood to long-rotation softwood in Australia.

The CEFC said its commitment had “spurred the inclusion of ambitious sustainability measures” by the fund, which include targeting investment in new greenfield plantations in Australia, transitioning vehicles and farm machinery to electric or renewable fuels, working with suppliers to achieve Scope 3 emissions reductions, and trials of emerging technologies that could help further reduce emissions intensity in forestry.

CEFC head of natural capital Heechung Sung said in a statement: “Natural capital assets offer significant opportunities to contribute to the decarbonization pathway for Australia and to build competitive new industries for our net-zero future. These require a long-term investment focus. The sooner we act, the greater the economic benefit and the more opportunity we have to mitigate the worst effects of climate change.

“As we all transition to a low-carbon future, the plantation forestry industry has an important role to play in the transition by reducing its own operating emissions while also generating high-integrity carbon credits which can be used by industry and high emitters to offset their carbon footprint.”

Jessika Ingvarsson, head of forest and agriculture investment at AP2, said: “With AP2’s long-term investment horizon, it is important to consider climate aspects in investment decisions. The forest industry has the unique opportunity to both reduce fossil use by replacing it with renewable products and at the same time increase carbon storage in growing forests and plays an important role in natural climate solutions.

“AP2 made its first investment with New Forests in 2010 and we are pleased to partner with a manager who shares our view on long-term and sustainability as well as forests’ crucial role in mitigating climate change. Together we hope to contribute to a greater focus on sustainable forestry and better resource utilization.”

ANZLAFF is New Forests’ fourth fund focused on Australia and New Zealand, the most recent of which, Australia New Zealand Forest Fund 3, closed on A$873 million in 2018. ANZFF2 closed on A$707 million in 2014, while the first ANZFF closed on A$490 million in 2010 before converting to a semi-permanent structure in 2020.