February 29, 2024

By Lynda Kiernan-Stone, Global AgInvesting Media

MEAG, the asset manager of Munich Re Group with current AUM of approximately €340 billion (US$367 billion), announced a first close for its MEAG Sustainable Forestry Equity Fund at $207 million committed by German insurers and the pension scheme of an unspecified DAX-listed company group. 

Munich Re Group has been investing in the asset class since 2009, with activity in 12 countries. At MEAG, forestry is part of its Alternative Asset Unit which includes infrastructure, real estate, natural capital, forestry, agriculture, and renewable energy.

“MEAG has decades of experience with forestry investments around the globe, and these have proven to be an important stability factor in our portfolio,” said Thomas Bayerl, managing director and global head of illiquid assets, MEAG. “In view of the challenging conditions on capital markets right now, we are even happier about the success of the fund’s first closing with more than US$200 million.”

With a focus on forested land in the established professional markets of the U.S., New Zealand, and Australia where investors have exposure to an attractive risk/return ratio, the fund will seek to capitalize upon the low correlation of forestry investment with other investment classes, as well as the long-term potential for value growth due to the increasing global demand for wood in response to trends toward sustainable construction and materials. 

The fund’s management team has many years of experience in investing in forestry assets in the targeted regions, generating value through active afforestation, management, harvest planning, and marketing. 

Initial investments through the fund are expected to occur in the first half of 2024, seeking out assets that mitigate risk through geographical spread, the varieties of woods, and the range of usage types covered. Further, when purchasing and managing these forested areas, the team can call upon the expertise and data of Munich Re Group when it comes to the risks that arise from climate change and natural disasters. 

And in alignment with its name, the fund will prioritize sustainability in accordance with Article 9 of the EU Disclosure Regulation (SFDR) through the adherence to a sustainable investment strategy through ecologically sustainable forest management within the meaning of the EU Taxonomy. The SFDR mandates that Financial Market Participants disclose the environmental and social impacts of transactions to stakeholders as a way to prevent greenwashing and increase transparency. Schemes that fall under Article 9 are those that have a clear objective of creating positive sustainable impacts and adhere to specific social or environmental goals.  

At the same time, the fund will strive to meet several sustainability goals of the United Nations (SDGs).

Within this framework, it will be part of the fund’s management to allocate five percent of its targeted volume of US$500-$700 million in new afforestation initiatives. 

It was expressed that feeder structures for investment in the MEAG Sustainable Forestry Equity Fund master fund are already established, or can be set in place as required. 

“We are delighted to be able to support MEAG in its ambitious project with an attractive offer as an asset servicing provider,” said Dr. Holger Sepp, member of the management board, Hauck Aufhäuser Lampe Privatbank AG, which is managing the fund. “Thanks to our many years of experience in Luxembourg, together we will be able to offer attractive and customized investment solutions.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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