By Gerelyn Terzo, Global AgInvesting Media

Manulife Investment Management, a global timberland investment manager boasting over 5 million acres under management, has announced the third and final close of its forest climate fund. The Manulife Forest Climate Fund has amassed a massive $480.1 million in commitments. Investors flocked to the climate solutions strategy, including corporates and global institutional investors actively seeking to combat climate change through sustainably managed forests, through which Manulife prioritizes carbon sequestration over timber production.

Manulife Investment Management Managing Director of Impact Investing and Natural Climate Solutions Eric Cooperstrom touched on the robust demand, stating, “Investors are showing confidence in forests as a top natural climate solution. With the interest we have seen in the fund, we will continue to pursue natural climate solutions to drive new opportunities for impact and results for our clients.”

Launched in 2022, Manulife’s Forest Climate Fund is a closed-end vehicle offering investors access to climate change action via sustainable forest management and the sequestration of carbon. The strategy was introduced on the heels of the firm’s 2021 acquisition (through Hancock Natural Resource Group) of nearly 90,000 acres of U.S. timberland in the U.S. state of Maine bordering Quebec, Canada. While not an investment in the Forest Climate Fund, the assets demonstrate the harnessing of timberland largely for carbon capture. By 2023, Manulife achieved first close of the carbon timber fund, amassing $224.5 million amid an initial target of $500 million.

So far, the fund has scooped up over 150,000 acres, and capital is almost 50 percent deployed. Additionally, the investment pipeline continues to grow as Manulife eyes additional opportunities for 2025 to further diversify and expand the portfolio.

Manulife Investment Management Global Head of Timberland Investments Tom Sarno commented, “We are excited to announce this milestone for the Manulife Forest Climate Fund and have seen strong interest in the forest climate strategy from a broad base of global investors, further highlighting the acceptance and growing use of forestland as a climate change mitigation tool that has added new dimensions to timberland investment.”

Most recently, the fund added Oak Bluff, whose footprint spans counties in Mississippi, Louisiana, and Arkansas. Manulife likens this addition to the fund’s second investment, Siscowet, situated on the upper peninsula of Michigan. The seller of Siscowet, which is named after the deep-water trout that are native to nearby Lake Superior, owned the land for over 100 years, managing it mostly for timber production.

Through the fund, Manulife Investment Management is targeting the sequestration of 6 million-plus tons of carbon dioxide to be sequestered over the term. In turn, it will offer durable and high-quality carbon credits to investors as well as the option for in-kind carbon credit distributions or offset sales. As a forest fund, it will also establish new forests through afforestation or reforestation with a view to generate high-quality carbon credits while also creating long-term sustainable timber value. The strategy targets the preservation of capital alongside moderate current income as well as the realization of profit from a combination of carbon value and long-term appreciation.

Carbon mitigation strategies have been in high demand of late, as global financial institutions and Big Tech alike pump capital into these solutions. In 2023, climate technology companies raised $51 billion in venture capital and private equity funding, a 12 percent year-over-year decline, albeit in a challenging fundraising environment, according to BloombergNEF data. A diversified forestry fund offsets some of the risks associated with the asset class, while income produced from operations strengthens a fund’s cash flow.

Manulife Investment Management is a diversified private markets platform boasting $100 billion to invest across infrastructure, real estate, private equity, private credit, timberland and agriculture.

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