November 11, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

Australian global forestry investment manager New Forests has partnered with CDC Group, the UK’s development finance institution; Finnfund, the Finnish Fund for Industrial Cooperation; and Norfund, the investment fund of the Norwegian government for developing nations, to raise $500 million over the next three to five years to scale and transform the sustainable forestry sector in sub-Saharan Africa. 

“We are excited to partner with like-minded investors in developing a scaled approach to investing in sustainable forestry in Africa,” said David Brand, CEO, New Forests. “New Forests’ vision is to see the forestry and land use sectors as central to the transition to a sustainable future. As we look towards fulfilling this vision, sub-Saharan Africa must be part of the equation.”

This partnership aims to build upon the existing commitments to sustainable forestry that each organization currently carry, bringing the expertise of CDC Group, Finnfund, and Norfund in investment in developing Africa, with New Forests’ track record in scaling investment and climate finance in forestry into new geographic and marketing channels.

The framework of this new investment vehicle remains to be revealed until early next year. However, it reflects the ambitions of the DFIs to realize climate-positive investments across Africa in the near-term by providing capital for the purpose of:

~ Supporting the development and effective management of sustainable forestry practices, including conservation of remaining natural forests.

~ Responsibly expanding productive forest plantations, community forests, and forest restoration projects across the region.

~ Facilitating the development of nature-based climate solutions that will help prevent forest loss and preserve Africa’s natural capital. And,

~ Accelerating the creation of green jobs, improving livelihoods, and generating sustainable and inclusive economic development in rural communities across sub-Saharan Africa.

As time progresses, the organizations stated that this partnership is not static, nor is it closed to interested and like-minded investors.

“We believe that responsible investment in sustainable forestry will preserve Africa’s rich natural environment and is a key step toward addressing the climate emergency, while bringing prosperity and green jobs to rural communities,” said Nick O’Donohoe, CEO, CDC Group. “As each COP conference demonstrates, cooperation is at the heart of climate action. We’ve already assembled a wealth of expertise to work together and as we develop the partnership, we will be looking to invite other like-minded leaders in the sector to join us.”

A Spring in Their Step

My first thought was that New Forests has had a very active autumn season this year, then I remembered that they’re headquartered in the Southern Hemisphere, so I supposed it would be more correct to say they’ve had a rather dynamic spring.

This partnership and new fund is only the latest major announcement in recent months. 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. offering high-impact strategies in sustainable forestry and its related sectors.

In July of this year, the company completed the acquisition of 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. 

In September 2021, New Forests partnered with Canadian institutional investor AIMCo for the acquisition of Lawson Grains from Macquarie Asset Management for $600 million. Lawson Grains, which is headquartered in Albury, New South Wales, represents one of the single largest cropping assets to ever be offered in Australia. The enterprise spans 90,500 hectares of arable agricultural land across New South Wales and Western Australia producing more than 200,000 tons of wheat, barley, canola, and pulses per year.

And in early October, New Forests was involved in a deal with two pension funds – the UK Pension Protection Fund (PFF), and APG Asset Management (working on behalf of Dutch pension fund ABP) – to manage control of New Zealand-based Wenita Forest Products, which has more than 30,000 hectares of radiata pine, Douglas fir, larch, Corsican pine, and eucalyptus. 

On the Ground

Africa is home to 17 percent of the world’s total forests, and 20 percent of its tropical forests. However, as the continent experiences unprecedented population growth and growing demand for wood products as economies mature and strengthen, these critical ecosystems are under increasing pressure from deforestation and the loss of biodiversity.

The partners stated that it is evermore critical that timber production becomes more sustainable, and forestry and landscape management practices improve so as to combat climate change and to create nature-positive outcomes for the region. 

“We are confident that this partnership will catalyse sustainable growth of the African forestry sector, thereby creating jobs, reducing deforestation and addressing climate change,” said Tellef Thorleifsson, CEO, Norfund.

A local team will be established on the ground in Nairobi, Kenya, to manage the portfolio of this new fund, which will also be assisted by Partnerships for Forests (P4F), a UK FCDO funded program.

“Partnerships for Forests (P4F), a UK FCDO funded programme, will fund the setup of a technical assistance facility to support the long-term environmental and social viability of the investment strategies,” commented Baemnet Aschenaki, regional director East Africa, P4F. “It will identify investments with opportunities for smallholders’ inclusion in the business model, as well as ensuring forest protection and landscape restoration activities are incorporated appropriately in the partnership’s target landscapes.”

Jaakko Kangasniemi, CEO of Finnfund, concluded, “Sustainable forestry is one key way to curb deforestation as well as climate change. Investing in responsible forestry companies has long been one of Finnfund’s focus areas. Besides the benefits to nature and climate, forestry can significantly contribute to people’s livelihoods – particularly in Africa. The forestry sector in Africa has enormous growth potential and by partnering with fellow development financiers and New Forests, we believe we can together bring the change needed to unlock that potential.”

– 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.