New Forests’ Tropical Asia Forest Fund 2 holds final close on $130m – exclusive

New Forests’ second Tropical Asia Forest Fund has ended up raising less capital than its predecessor, which closed on $170m in 2012.

New Forests has fallen short of the fundraising target for its Tropical Asia Forest Fund 2, securing $130 million against a target of $300 million.

TAFF 2 is a closed-end fund that focuses on sustainable plantation forestry investments in markets in Southeast Asia. It is a successor to New Forests’ first Tropical Asia Forest Fund, which closed on $170 million in 2012.

The latest vehicle held a first close on $120 million in early 2022, so has secured only a further $10 million since then before holding a final close on December 31, 2023.

Japanese investors Mitsui & Co and Nomura, who together acquired a majority stake in New Forests itself in 2022, announced they had made commitments of an undisclosed size to TAFF2 in 2023.

In a statement at the time of the first close in 2022, New Forests said other LPs that had invested in the fund included the Asian Development Bank, which committed $15 million, as well as the Australian Climate Finance Partnership, the David and Lucile Packard Foundation, Sumitomo Mitsui Trust Bank, Temasek and TotalEnergies.

A spokeswoman for New Forests confirmed the final close, with deployment set to begin this year.

Geoffrey Seeto, head of emerging markets for New Forests, said in a statement provided to Agri Investor that the firm was still in discussions with existing LPs and prospective co-investors about opportunities to invest alongside the fund.

“Our investments team has built out a good pipeline of deals across the region to develop a diversified portfolio of sustainable forest plantation assets in Malaysia, Indonesia, Vietnam, Thailand, Laos and Cambodia for end markets such as timber, rubber and carbon,” he said.

“Southeast Asia’s share of timber production is expected to rise from 39 percent in 2013 to 62 percent of world plantation production by 2050.  We believe that investment in sustainable forest plantations in this region will play a crucial role in transitioning the Southeast Asian forestry sector.”

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