New Forests announces first close of Australia New Zealand Landscapes and Forestry Fund raising approximately A$450 million from investors
Demand for natural capital grows as investors look to meet investment, climate, and nature goals
SYDNEY, 20 December 2023 – New Forests, a global investment manager of nature-based real assets and natural capital strategies, is today announcing the first close of the Australia New Zealand Landscapes and Forestry Fund (ANZLAFF), raising approximately A$450 million from institutional investors from Australia and Europe.
Investors in the first close include Swedish pension fund Andra AP-fonden (AP2); German pension group Bayerische Versorgungskammer (BVK); the Australian Government’s Clean Energy Finance Corporation (CEFC); along with an Australian and a German insurer, as part of an overall fund raise targeting A$600 million over the next year.
ANZLAFF (the Fund) aims to provide investment exposure to integrated forest, land, carbon and agriculture markets in Australia and New Zealand, targeting investments in core forestry plantations alongside processing and related infrastructure, with some exposure to agriculture.
The Fund aims to maximise the value of the whole landscape by positioning investors to benefit from the best use of the landscape across forestry and agriculture, while combining additional revenue streams such as carbon, biodiversity, and renewable energy such as solar and wind.
In addition to attractive returns, the Fund has set other targets including carbon abatement through the establishment of new greenfield plantations and the conversion of existing plantations from hardwood (short rotations) to softwood (long rotations) in Australia.
David Shelton, Managing Director, Australia and New Zealand at New Forests said, “Since New Forests launched its first fund 13 years ago, the market is now seeing a clear shift from investing in narrow mandates around forestry and agriculture alone, to include a wider set of considerations and returns. Investors globally are now thinking about the role of forestry, agriculture and land use transition in not only delivering returns, but reducing emissions, contributing to conservation, and the circular bioeconomy.
We believe there is no credible pathway to net zero without investment in the forestry and land use sectors, and we are pleased both new and existing investors are taking an important step in continuing the transition to a sustainable future.
Heechung Sung, Clean Energy Finance Corporation (CEFC) Head of Natural Capital said, “Natural capital assets offer significant opportunities to contribute to the decarbonisation 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.
“We are pleased to work with an experienced global manager in the forestry sector to target the ambitious carbon sequestration and sustainability measures through this investment, which is part of our broader drive into natural capital.”
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 utilisation.”
Kathrin Kalau-Reus, Head of Private Equity, Infrastructure & Timber at BVK said, “We are pleased to renew the partnership with the experienced team at New Forests. Being a longstanding investor in the forestry sector, the asset class contributes to environmental sustainability by supporting responsible land management and afforestation initiatives. This supports our belief that aligning our business practices with sustainable and responsible principles leads to a positive and lasting impact on the environment and shows attractive returns.”
ANZLAFF is New Forests’ fourth round Australia and New Zealand strategy, building on the experience of previous strategies, which collectively manage A$4.8 billion.
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