AXA IM Alts has made its largest investment yet in timberland, with the acquisition of the Green Triangle Forest Products estate in Australia from US-based Global Forest Partners.
The selling price is believed to have been more than A$700m (€436m).
AXA IM Alts declined to comment on the value of the transaction.
The acquisition will increase the €162bn alternatives investment manager’s forestry portfolio from a current 58,000 hectares located in France, Iceland and Finland to over 80,000 hectares.
The estate is located in one of the largest in Australia’s premier forestry region, the Green Triangle, which straddles the states of Victoria and South Australia.
Kumar Kalyanakumar, AXA IM Alts head of Australia, told IPE Real Assets that the bulk of the plantation was made up of radiata pine trees. The softwood timber that is produced would predominantly supply housing and construction sectors in Australia.
Explaining the rationale for investing in the forest, Kalyanakumar said: “The biggest investment risk today is climate change, and, as an active manager, we are actively seeking to decarbonise our portfolio.
“As an investor in infrastructure and real estate, these are assets with a sizeable carbon footprint. Investing in forestry allows us to start on the journey towards a low carbon environment.”
It is not all about responsible investing, he said. “The beauty here is that forestry delivers the twin benefits of sustainable investment and strong risk-adjusted returns.”
AXA IM Alts first invested in forestry some 30 years ago and in recent years, the firm has developed a clear strategy to pivot into “natural capital” such as sustainable agriculture and forestry.
Isabelle Scemama, global head of AXA IM Alts, said: “This new investment in sustainably-managed forestry is a further step in our decarbonisation strategy, and a way to accelerate our transition to a net zero environment.”
Funds advised by Global Forest Partners first invested in the Green Triangle Forest in 1999, taking full ownership in 2008.
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