New Forests, an investment manager of nature-based real assets headquartered in Sydney, has launched a fund to raise A$600 million (US$407 million) over the next two to three years.
The Australia New Zealand Landscapes and Forestry Fund (ANZLAFF) seeks to provide institutional investors with exposure to integrated forest, land and agriculture markets in Australia and New Zealand. It will invest in core forestry plantations, alongside processing and logistics companies, as well as primary agriculture commodities.
Additionally, the fund will aim to enhance climate mitigation through carbon sequestration and emissions reduction opportunities.
ANZLAFF is the fourth round of New Forests’ Australia and New Zealand landscapes and forestry strategy, building on the experience of previous strategies which collectively manage A$4.67 billion.
Underpinning New Forests’ investment approach is its Responsible Investment Framework, which seeks to ensure investments are aligned with the interests of the communities it invests in and with the needs of clients.
Some of these initiatives include delivering certified sustainable forestry, sustainable agriculture, increased natural climate solutions by reducing carbon emissions and increasing carbon removals, supporting the bio-economy where renewable wood fibre replaces fossils-based materials, and reconciliation action plans.
Acquisition gives financial heft
Commenting on the fund launch, Jo Saleeba, head of sustainability at New Forests, says: “Beyond the sustainable management of assets, ANZLAFF is designed to provide investors with an opportunity to invest in natural climate solutions at scale, not only in the monetization of carbon sequestration opportunities but also in the emerging circular bio-economy. Wood fibre is projected over time to replace many higher-carbon products currently created from petrochemical plastic, steel and concrete.”
The latest deal is the first in Asia-Pacific since New Forests announced it was being jointly acquired by Japanese conglomerate Mitsui & Co and Japanese bank Nomura.
In May this year Mitsui and Nomura agreed to acquire 100% of New Forests. Under the agreement, Mitsui increased its stake in the asset manager to 49% from the 23% interest it acquired in 2016, with Nomura securing a 41% ownership. The remaining shares are being distributed to New Forests employees.
The deal will see Mitsui and Nomura provide New Forests with the financial heft to further scale the platform in an investment sector that New Forests chief executive officer David Brand says is worth about US$400 billion.
However, with the exponential growth of carbon exchanges seeking carbon-offset assets, Brand believes that that valuation could expand to as much as US$1 trillion.