July 29, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

Global alternative investment leader AXA IM Alts announced it has agreed to acquire 24,000 hectares (59,305 acres) of Australian forest and the associated forest management business from investment funds advised by U.S.-based Global Forest Partners LP (GFP) through a deal valued at approximately $775 million. 

This acquisition of the Green Triangle Forest Products estate (GTFP) is AXA IM’s first investment in Australian forestry, which already owned nearly 60,000 hectares of forests in Ireland, France, and Finland. It was made on behalf of clients by AXA IM Alts’ Real Asset team, and represents one of the largest investments in the Australian forestry market by value in more than a decade – since the government of South Australia sold the harvesting rights to its state-owned plantations to OneFortyOne Plantations for $670 million in 2012. 

“…[this transaction] adds to our growing global portfolio of forestry assets, now exceeding 80,000 hectares,” said Isabelle Scemama, global head, AXA IM Alts. “This new investment in sustainably managed forestry is also a further step in our decarbonization strategy and a way to accelerate our transition to a net zero environment.”

The estate is one of the largest in the 350,000-hectare (864,868-acre) Australian Green Triangle forestry region, located in southeast South Australia and southwest Victoria. The estate includes more than 22,000 hectares (54,363 acres) of production and sustainably managed land comprising a mixed-age portfolio of exclusively Radiata Pine forests, serving as one of the major suppliers of sawlog, and is an integral part of Australia’s largest domestic processing region.

Aside from the Green Triangle Forest Product estate, the region is also home to OneFortyOne Plantations, managed by the Future Fund, and New Forests, a global investment manager that just acquired 156,000 acres of forest land in the Hilt-Siskiyou Forest – a mixed conifer forest along the border of California and Oregon – from Fruit Growers Supply Company (FGS), alongside an institutional investor client. 

The funds advised by GFP initially invested in the GTFP estate in 1999, and became full owners in 2008. Over the course of their ownership, investments were continually made toward the improvement of the forests’ management and operation of the portfolio, resulting in a high-quality, sustainable plantation.

The mixed-age of the trees is a key draw for this asset, as it allows for continued timber harvest and tree planting cycles that will generate a steady return.

The forest’s capacity for significant carbon sequestration also aligns with AXA IM’s broader approach to responsible investment, noted the firm, and its pursuit of opportunities that combat climate change, preserve biodiversity, and provide sustainable returns for its clients.

Currently, the portfolio has an approximate carbon stock exceeding 8 million tons of stored CO2 within the biomass of the forest – something that AXA IM stated can be improved upon over time through adjustments to planting and harvesting schedules. 

Seventy percent of GTFP’s harvest is currently being manufactured into high-value structural timber for construction – and this transaction also gives AXA IM the ability to forward its efforts to reduce carbon within Australia’s construction and housing markets due to the low-carbon properties of the softwood timber grown on the estate.

“We like the Australian forestry sector’s structural attractiveness of steadily growing demand and static supply,” Kumar Kalyanakumar, head of the Australian arm of AXA IM Alts, told AFR. 

“As an investment manager, we are also attracted to the benefit that forestry investments can offer in our pursuit of decarbonization of our clients’ portfolios.”

–  Lynda Kiernan-Stone is editor 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 Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com.