August 31, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Both Mitsui & Co. and Nomura, a global financial services group with a network spanning more than 30 countries and regions, have concluded agreements to invest in Tropical Asia Forest Fund 2, a Southeast Asian forestry resource fund managed by New Forests Asia, a wholly owned subsidiary of New Forests.

It was just three months ago, in May 2023, that Mitsui and Nomura announced their agreement to acquire New Forests, the second largest forestry investment manager in the world and the largest in the timber and plantation sectors in Asia-Pacific. 

Under the agreement, through which Mitsui and Nomura acquired 100 percent of New Forests, Mitsui, which has been a shareholder in New forests since 2016, increased its holding from 23 percent to 49 percent, while Nomura secured 41 percent, and the remaining 10 percent was retained by New Forests’ staff.

Headquartered in Sydney since its inception in 2005, New Forests is a certified B corporation with operations in Australia, New Zealand, Southeast Asia, and the U.S. that offers high-impact strategies in sustainable forestry and its related sectors.

To-date, the group holds a portfolio with A$10.73 billion (US$7.3 billion) in AUM across more than 1.2 million hectares (3.14 million acres) of investments consisting of sustainable forest plantations, areas of natural forest conservation, carbon projects, row cropping, and timber processing.

With an office in Singapore, and a mission “to see investment in land use and forestry as central to the transition to a sustainable future”, TAFF 2 is New Forests’ second fund dedicated to sustainable forestry opportunities in Southeast Asia. This followed the close of its Tropical Asia Forest Fund (TAFF) in 2013, and carries forward a mission to contribute to climate change mitigation, biodiversity protection, and sustainable forest conservation as part of its investment thesis.

As one of the more important New Forest Subsidiaries, New Forests Asia emphasizes not only on the stable supply of timber, but also forests’ environmental values, their harmony with local communities, and creating a sustainable future while generating steady, long-term returns for investors – all missions that Mitsui and Nomura share. 

Back in May it was stated that through this partnership, Mitsui and Nomura would provide capital supporting New Forests’ growth initiatives and global expansion plans, and in turn, New Forests would leverage Nomura’s global network, particularly across Japan and more widely across Asia.

Indeed, Nomura stated this leveraging of its global platform includes its wholly owned subsidiary Nomura Asset Management, to market multiple funds managed by New Forests, including TAFF2, to clients in Japan and overseas.

This capital commitment marks the first investment in a forest fund managed by New Forests for Nomura, which stated that it seeks to obtain a share of excess carbon credits generated through the fund’s investments in forestry and carbon projects, along with financial returns. 

There has been a surge in demand for carbon credits among companies seeking to offset their greenhouse gas emissions. This trend, which is only expected to continue growing, is driven by a combination of factors, including growing environmental awareness, regulatory pressures, corporate social responsibility initiatives, and a broader shift towards sustainable business practices.

In addition to building its knowledge and expertise on forestry resources and carbon credits, Nomura stated that it will focus on creating related businesses to take advantage of growth opportunities on a global scale. 

“We have been impressed with New Forests’ leadership and track record in sustainable forestry and land use and see New Forests’ approach to climate change being complementary to Nomura’s business,” said Yoshihiro Namura, senior managing director, head of investment management division at Nomura, in May.  

“As a large global financial services group, we play a significant role in helping to solve environmental challenges, and we see investment in sustainable land use and forestry as a key part of the solution.”

~ 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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