July 12, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Oslo-based Kommunal Landspensjonskasse Gjensidig Forsikringsselskap (KLP), Norway’s largest pension fund manager, has partnered with Investinor, a widely experienced investment manager that manages the Norwegian state’s interests in seed capital and pre-seed funding scheme, to launch 3K6 –  Norway’s first forestry investment fund.

Each partner is committing an initial investment of NOK 150 million (approximately US$15 million) for a total capital foundation of NOK 300 million, or about US$30 million, to invest in innovative companies in the Norwegian forest-related sector, while the forestry industry will contribute assets through the company Shelterwood AS. 

Owned by key players in the forest industry as well as Investinor, Shelterwood is an investment company focused on early growth stage investments within the forestry-related sector, with Arbaflame and Store Norske Elementfabrikker, among others, already in its portfolio. 

“If Norway is to succeed with the green shift, we must invest in the renewable industries,” said Anders Øynes, chairman, Shelterwood. “Forest is one of them. We want to contribute to the transition towards a more sustainable future while creating growth and value creation in Norway.”

Due to their extensive experience with forestry investment, the fund will be managed by Investinor, which stated that the goal is to “make Norway richer and the world greener”, adding that thanks to sustainability and digitization there exist vast opportunities for the traditional forestry industry, but the lack of competent capital and active ownership have been challenging. So by launching 3K6, the partners are addressing these hurdles by ensuring long-term industrial ownership and access to capital. 

Norwegian Wood

Over recent years the volume of timber being cut in Norway has been increasing, according to the partners. Of the total cut, one-third of the volume is being exported at a value of approximately NOK 80 billion (approximately US$8 billion) over a 20-year time period, while timber processing is expected to have a value creation potential of NOK 3,600 billion (US$356 billion) over that same time frame. 

However, each year the country experiences missed opportunities and value creation by exporting untreated timber to outside markets. By supporting greater timber processing, the partners will not only create value, but will develop industrial workplaces and long value chains in the country – activity that Ann-Tove Kongsnes, acting managing director, Investinor called green growth in practice. 

The fund’s name – 3K6, which is an abbreviation for 3,600, is reflective of this and was specifically chosen by the partners to represent the goal of the fund – to realize the greatest value that lies dormant in the further process and business development in Norwegian timber. 

There are multiple trends occurring in Norwegian forests that the partners cite as being positive drivers for the fund:

~ Strong growth in the sustainable construction segment – wood is commanding market share away from other building materials and former technological limitations for wood-based construction have been greatly reduced. 

~ Great progress being made in biochemistry and materials – renewable forest products are now far more able to replace fossil-based products. Together with greater automation and digitization, this is creating new market opportunities and higher demand. 

~ A need for capital – in order to capitalize upon these opportunities and trends, investment capital must be available in the industry. This is where 3K6 is key. 

“Forests are an important natural resource with great potential as a sustainable input factor for value creation,”  said Sverre Thornes, CEO, KLP. “We are pleased to be involved in establishing 3K6, which will be a fund that will invest in business development within the forestry sector in this country.”

~ 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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