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New Forests sets its sights on the Asian responsible investment market

New Forests sets its sights on the Asian responsible investment market | Timberland Investment | Scoop.it
New Forests, a Sydney-based sustainable real assets investment specialist, is pressing ahead with its responsible investment approach in Asia to capitalise on growing institutional interest in environmental, social and governance (ESG) investments in the region.  

David Brand, chief executive officer at New Forests, tells Asia Asset Management that the company is primarily engaged in managing a diverse set of forestry investments in the US, Australia and New Zealand. Over the years, the business has seen substantial growth and now has A$2.8 billion (US$2.1 billion) in total AUM, since its inception in 2005 with total AUM of A$50 million.

The growth was partly fuelled by its Asian expansion. In 2013, New Forests established its footprint in Asia with the launch of its first institutional investment fund, the Tropical Asia Forest Fund (TAFF), dedicated to sustainable forestry in tropical Southeast Asia with $170 million of committed capital from pension funds and developed banks.

In December 2015, TAFF formed a joint venture with Indonesia-listed PT Sampoerna Agro Tbk to invest in an Indonesian rubber plantation. The investment includes an environmental & social agreement (ESA) that accompanies the shareholder’s agreement and covers the implementation of ESG measures.

Mr. Brand believes that Asian institutional investors have become more aware of the significance of ESG. From an operational perspective, institutional investors could benefit from ESG investment by realigning their corporate structure to their communities and the economic outcomes of their investments.    
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New Forests Announces Final Close of the Tropical Asia Forest Fund with $170 million of Capital Commitments and Completes Fund’s First Transaction

New Forests Announces Final Close of the Tropical Asia Forest Fund with $170 million of Capital Commitments and Completes Fund’s First Transaction | Timberland Investment | Scoop.it

New Forests today announced the final close of the New Forests Tropical Asia Forest Fund (“TAFF”). TAFF has closed with a total of US$170 million in capital commitments, which will be invested in sustainable plantation forestry investments in Southeast Asia, with a primary focus on Malaysia, Indonesia, and Vietnam.


New Forests also announced the completion of the fund’s first investment, the acquisition of a majority interest in the Hijauan group, which includes the wholly-owned Hijauan Bengkoka Plantations and a 50% shareholding in Acacia Forest Industries. Together, these two companies are responsible for management, harvest, and future rotations of an Acaciamangium plantation in northern Sabah, Malaysia. The plantation area currently includes approximately 11,000 hectares of acacia plantation, producing saw logs and pulpwood for domestic and regional export markets.

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As timber supply from natural forests in Southeast Asia declines, there is an increasing need for investment in high quality, sustainably managed plantation forests. TAFF is the first private investment vehicle dedicated to sustainable plantation timber production in Southeast Asia using long-term, institutional capital. TAFF will establish a portfolio of assets producing high value sawlogs and veneer logs. The fund’s investments are overseen by New Forests Asia (Singapore) Pte Ltd and managed by co-portfolio managers Darius Sarshar and Paul Speed, supported by a team of specialist forestry and investment professionals.
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Asian log buyers outbidding B.C. mills

Asian log buyers outbidding B.C. mills | Timberland Investment | Scoop.it

Forest Minister is under fire over record log exports from the B.C.

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Total coastal log exports increased to a record 5.87 million cubic meters in 2011, up from 3.86 million in 2010, according to forest ministry figures. That includes logs exported from private land, which are regulated by Ottawa. About 20 per cent of logs from Crown land in coastal B.C. are going to export.

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Is Asia-Pacific Timberland a Growth Sector?

Is Asia-Pacific Timberland a Growth Sector? | Timberland Investment | Scoop.it
Expansion within the asset class, the firm said, “is expected to come from emerging and intermediate forestry markets, such as those of Europe, Latin America, Asia and Africa.” Because of the risks—environmental, social, corporate governance and others—presented by some parts of Latin America and the developing economies in Asia and Africa, “emerging forestry markets must meet investor risk-adjusted returns that are as much as two to three times the returns sought for U.S. forestry investments.”


That said, TIMOs are looking for ways to expand, and many of them, “already well diversified within North America,” are looking outside the U.S. to do so. New Forests’ Tropical Asia Forest Fund, which closed in 2013, represents the firm’s expansion across the Asia-Pacific region. Campbell Global, which is U.S.-based, this year announced an expansion into new markets with a global fund that will invest in Latin America and Australasia. The report said that among the top 30 TIMOs globally, seven are operating in Asia and eight in Australia and New Zealand as they increasingly diversify into additional regions.

Transactions, meanwhile, have revealed downward pressure on discount rates on both softwood and hardwood assets in Australia and New Zealand. The report said that “there may be continued pressure on investors to keep discount rates low to secure assets” since “the New Zealand and Australia timberland market is now maturing with more active investment managers competing on deals.”

However, such a fate may not await investors, since “[i]t could also be argued that discount rates in Australia and New Zealand may converge with those in the U.S. market given the comparable political and business risk environment, higher tree growth rates, and exposure to the important Asian markets.”

Asia and Africa are on the “emerging edge of forestry investment,” according to the report. As yet there isn’t much institutional investment in forests in either region, and both have relatively high discount rates. In Indonesia and Malaysia, for example, the report said that real discount rates range from 9–15 percent. In addition, local forestry companies can have an advantage over foreign investors because of their access to lower discount rates or lower-cost debt financing.

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South Korea, Japan to become large importers of pellets and energy chips, reports the Wood Resource Quarterly

South Korea, Japan to become large importers of pellets and energy chips, reports the Wood Resource Quarterly | Timberland Investment | Scoop.it

The governments in Japan and South Korea have announced definite plans to increase their usage of green and low carbon energy alternatives.


South Korea is taking steps to reduce its dependence on imported fossil fuels and instead invest in domestic renewable energy technology, including wind, solar, hydropower, and biomass. The long-term plan is to increase the renewable energy share from less than four percent in 2011 to 6.1 percent in 2020, and then to 11.5 percent in 2030.


As part of this effort the government has initiated a program, which has included building eight new pellet plants, as well as exploring opportunities to import large volumes of pellets in the future. The goal is to consume five million tons of pellets by 2020, a huge increase from the less than a few hundred thousand tons used in 2011.

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Japan is another Asian country expected to increase importation of energy chips and wood pellets, due in part to the nuclear power plant accident in Fukushima last year. Following the disaster, the Japanese government decided to close down all nuclear plants, at least temporarily.

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In the future, Japan will increasingly rely on renewable energy sources, with biomass likely to be one important supply source. Up until this year, Japan has imported only very limited volumes of wood pellet, primarily from Canada, but it is likely that import volumes of both pellets and energy chips will increase in the coming years.

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