High Asset

New Forests to double Asian assets after securing $165m for new fund

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TAFF2 is expected to expand, with New Forests seeking to increase the size of the fund up to $US300 million this year.

The new fund is also blended to allow investors to choose traditional forestry investments that will typically earn a higher return compared to the so-called class B investors who have opted to invest in high sustainability projects and will receive a lower return.

Investors include the federal government, the Asian Development Bank, Sumitomo Mitsui Trust Bank and TotalEnergies.

The fund, known as Tropical Asia Forest Fund 2 (TAFF2), will use the money to establish a portfolio of sustainable forest plantation assets in Malaysia, Indonesia, Vietnam, Thailand, Laos and Cambodia for end markets such as timber, rubber and carbon.

New Forests already owns between 140,000 and 150,000 hectares of plantations in south-east Asia and the new fund will look to acquire up to 300,000 hectares, Mr Brand told the Financial Review.

He said these investments were likely to be concluded within three to four years, with dealmaking in south-east Asia often protracted.

“In south-east Asia, a lot of the deals are bilateral, you’re dealing with government leasehold land. You’re often having to work through a variety of social and environmental issues as part of due diligence to get the project designed right,” Mr Brand said.

“It can take a couple of years to get through a transaction sometimes, but it goes to the discount rate and the pricing of the cash flows.”

Africa next

New Forests was founded in 2005 by forestry veteran Mr Brand, who built up the company through the acquisition of distressed forestry assets following the collapse of managed investment scheme operators Great Southern and Timbercorp in 2009.

New Forests manages a $7.8 billion portfolio of forestry and conservation investments covering over one million hectares on behalf of institutional investors, and is one of the largest private landowners in Australia and New Zealand.

Having significantly expanded in Australia, New Zealand and south-east Asia, Mr Brand said New Forests would soon expand into Africa.

Late last year at COP26, New Forests said it would partner with CDC Group, the UK’s development finance institution; Finnfund, the Finnish Fund for Industrial Cooperation; Norfund, the Norwegian government’s investment fund for developing countries; to raise up to $500 million over the next three to five years in the fight against climate change.

Africa is home to about 17 per cent of the world’s forests, including 20 per cent of all tropical forests, and Mr Brand said the group is closing in on its first investment.

“That’s fairly imminent, and I can’t really pre-announce that,” he said.

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