March 3, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

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. 

Today, it is the second largest forestry investment manager in the world, and the largest in the timber and plantation sectors in Asia-Pacific, with A$7.8 billion (US$5.8 billion) in AUM across more than 1.1 million hectares of investments consisting of sustainable forest plantations, areas of natural forest conservation, carbon projects, row cropping, and timber processing.

Since last summer, New Forests has been rather busy, acquiring 156,ooo acres in the Hilt-Siskyou Forest; acquiring Lawson Grains; developing a A$50M carbon offset fund with Mitsui; and partnering with CDC Group, Finfund, and Norfund on a $500 million forestry investment scheme in sub-Saharan Africa. But, they’re not done yet – lately announcing a first close at $120 million for its Tropical Asia Forest Fund 2 (TAFF2) backed by a cadre of investors including sovereign wealth, corporate, philanthropic, and development finance capital from Australia, Europe, Japan, the Philippines, Singapore, and the U.S.

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, following the close of its Tropical Asia Forest Fund (TAFF) in 2013. 

Some of the investors participating include the Asian Development Bank (ADB), the Australian Government, the David and Lucile Packard Foundation, Sumitomo Mitsui Trust Bank (SuMi TRUST) Temasek, and TotalEnergies.

The ADB has made its own announcement that it has committed $15 million to TAFF 2, of which $10 million was from the Australian Climate Finance Partnership trust fund.

Demand and Integration

Asia is home to the fastest growing demand for wood products, and New Forests stated that investment is needed not only in sustainable plantations, but also in productive landscapes that are integrated with positive climate, biodiversity impacts, and sustainable development in order to foster a successful sustainability transition in the region. 

Geoffrey Seeto, managing director at New Forests, commented,  “Southeast Asia offers institutional investors competitive forestry returns compared to more established markets, diversification into new markets, and the capacity to support the region’s transition to a sustainable, climate-smart forest industry.”

“We are excited to be partnering with leading institutional investors from Asia Pacific, Europe and the United States,” Seeto continued, “who will play a key role in Asia’s forestry sector transitioning towards more responsible forestry management.”

As such, TAFF 2 was created as a closed-end fund aiming to capitalize on the long-term investment opportunities in sustainable plantation forestry that exist in Southeast Asia. The fund is expected to build-out a diversified portfolio of sustainable forest plantation assets in Malaysia, Indonesia, Vietnam, Thailand, Laos, and Cambodia for end markets such as timber, rubber, and carbon.

The fund also includes a novel blended finance structure that enables TAFF 2 to integrate investments in impact activities focused on climate action, community engagement and livelihoods, and biodiversity conservation into its plantation forestry portfolio.

These impact activities will be closely tied to the Paris Agreement and the UN Sustainable Development Goals (SDGs), and New Forests intends to demonstrate that asset management that integrates commercial forestry investment with activities such as ecosystem restoration, reforestation, and community forestry will result in better returns, operational resilience, and long-term sustainability outcomes.

“Asia is central to the economic and sustainability transformations happening in the 21st century,” noted David Brand, CEO, New Forests. “Asia has an important role to play in aligning its growth with climate positive, nature positive, and sustainable development outcomes.”

“The TAFF 2 investment strategy has been developed to invest capital in these transformations, using the blended finance structure to mobilize more capital towards high social and environmental impact outcomes.”

*The content put forth by GAI News and its parent company HighQuest Partners is intended to be used and must be used for informational purposes only. All information or other material herein is not to be construed as legal, tax, investment, financial, or other advice. GAI and HighQuest Partners are not a fiduciary in any manner, and the reader assumes the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on this site.

– 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.