now loading...
Wealth Asia Connect Middle East Treasury & Capital Markets Europe ESG Forum TechTalk
Green Finance / ESG Investing / Asset Management / Wealth Management
Money grows on trees amid climate fight
Investment manager sees rising investor interest in forests as an asset class
Tom King 13 Sep 2021

Trees are nature’s time-tested technology to fight climate change, and it is becoming increasingly clear to the investment community that their role in the drive towards sustainability cannot be ignored.   

China, along with its pledge to achieve carbon neutrality, recently committed to planting 36,000 square kilometres of new forests a year until 2025.

For investors looking at forests as an asset class, the choice of products is still quite limited. The benefits are undeniable, however. Aside from offering financial rewards, investing in forests also offers diversification within a portfolio through its environmental, social, and governance (ESG) compliance. And that is attracting more Asian-based investors. 

“We recognized the opportunity in 2009 and established an office in Asia. Since then, we've been the only dedicated institutional forestry fund in Asia,” says Geoffrey Seeto, managing director at global forestry investment management firm New Forests Asset Management (NF).

Seeto also oversees the NF timberland investment programme in Southeast Asia.

Targeted opportunities

Headquartered in Sydney and with offices in Singapore and San Francisco, NF offers institutional investors targeted opportunities in the Asia-Pacific region and the United States in sustainable timber plantations, rural land, and conservation investments.

The company, which currently has more than US$4.2 billion in assets under management, also manages timber processing businesses and infrastructure assets and has an international timber marketing and trading subsidiary.

“The Tropical Asia Forestry Fund 1 raised US$170 million and closed in 2013,” Seeto tells The Asset. “The fund invests in assets in Laos, Malaysia and Indonesia, and was the first dedicated institutional forestry fund in Southeast Asia.”

The company is currently raising money for the second iteration of this fund, which it is looking to close later this year. 

“In Singapore, we've got about nine people on the ground here that cover both the investment side of the business and the ongoing active management or operation side of that business,” he notes.

Patience rewarded

What has changed dramatically since NF launched its first fund in Asia is the awareness and strong appetite of institutional investors to invest in climate and sustainability-linked products, especially since the start of the global pandemic.   

“We've been patient, dedicated and committed to this strategy and now there is a real opportunity for us, not just on the financial side but also on the impact side,” Seeto says.

“We've been able to get interest from large Asian institutional investors, and while that's more recognition of the asset class, forestry and impact investing in Asia also helps develop livelihoods and biodiversity, and as you know this is becoming less and less in Asia through traditional timber market management based on deforestation.”

Seeto says NF wants to drive as much scale into the asset class as possible, not only to generate financial returns for investors, but also to generate climate and impact outcomes to ultimately make a difference.

Minimum ticket size

Aside from traditional pension fund investors that are looking to generate returns and impact outcomes, there is also growing interest from Asian-based family and multi-family offices, he says.

Investors interested in NF funds have to meet the minimum ticket size, which he says is “less than US$10 million and more than one”.

“I have talked to many family offices, multi-family offices and high-net-worth individuals in the region, and there's a tremendous amount of interest in this asset class,” Seeto adds.

Conversation
Philippe Tassin
Philippe Tassin
head of asset managers & owners client lines, Asia-Pacific
BNP Paribas Securities Services
- JOINED THE EVENT -
In-person roundtable
Tech in ESG
View Highlights
Conversation
Satoru Yamadera
Satoru Yamadera
advisor, economic research and regional cooperation department
Asian Development Bank
- JOINED THE EVENT -
17th Asia Bond Markets Summit - China Edition
Rebalancing in the transition journey
View Highlights