FMO (the Netherlands Development Finance Company) has executed a subscription agreement to invest in the New Forests Tropical Asia Forest Fund (TAFF), a private equity fund managed by Australian-based fund manager New Forests. With FMO’s USD 15 million investment, financed out of the government fund IDF, TAFF now has completed a first close with commitments of USD 100 million and immediately investible capital of USD 76 million. Other investors in TAFF include the Finnish Fund for Industrial Cooperation (Finnfund), the Danish Development Bank (IFU) and two European pension funds.
The Fund will make investments in new and existing Forest Stewardship Council (FSC) certified timber plantations, natural forest concessions and timber processing facilities in South-East Asia. TAFF has a high level of commitment to sustainable development, which it aims to achieve by: (i) complying with IFC Performance Standards and attaining FSC certification for its assets; and (ii) investing in environmental assets that can profit from a growing demand for forestry related carbon offsets (including REDD) and biodiversity offsets. The Fund is a first of its kind, as there are no comparable private equity funds active in South-East Asia in this sector. FMO will further provide a EUR 200,000 grant to promote the development of the environmental assets that TAFF plans to acquire as part of its investment program.
New Forests Managing Director, David Brand said, “We are pleased to see the first close of the Tropical Asia Forest Fund, which we believe will be the start of a growing trend towards institutional investment in sustainable forestry in the Asia Pacific Region. We also recognize that the support of FMO and the other development finance organizations has played an important role in supporting the strong orientation of TAFF towards sustainable and responsible investment.”
“This landmark first contract in Sustainable Forestry marks an important step towards a more sustainable planet. Together with other investments in the so-called Climate Business, this investment contributes to the reduction of greenhouse gas emissions from deforestation and forest degradation, which is responsible for about 15% of global greenhouse gas emissions annually,” said Nanno Kleiterp, CEO of FMO.
About New Forests
New Forests Pty Limited (“New Forests”) (www.newforests.com.au) manages investments in sustainable forestry and associated environmental markets for institutional and other qualified wholesale investors. New Forests executes three investment strategies that provide clients with diversity and choice around risk-adjusted returns, geography, and market exposure: sustainable timberland investment in Australia and New Zealand; forestry investment in high-growth markets of the Asia Pacific region; and conservation real estate and environmental markets investment in the United States. The company has offices in Sydney, Singapore, and San Francisco and currently manages more than $1.25 billion in assets and over 400,000 hectares of land in Australasia, the United States, and Asia.
