UK’s development finance institution British International Investment (BII) and its counterparts from Finland and Norway – Finnfund and Norfund – are backers of a new African forestry fund managed by New Forests.

Global forestry fund manager New Forests has launched the African Forestry Impact Platform (AFIP), raising $200m (€203m) in its first close from the three government development agencies.

Geoffrey Seeto, New Forests’ managing director overseeing Africa and Southeast Asia, told IPE Real Assets the plan was to raise around $500m as the open-ended fund acquired assets over the next two to three years from institutional investors.

“We have already identified our first asset, a company operating around 38,000 hectares of forest in Tanzania, Uganda and Mozambique. Acquisition of the asset is going to be done in conjunction with the raising of the capital,” he said.

The company, Green Resources, is the largest East African forest development and wood processing entity.

Seeto said the New Forests’ team was currently doing due diligence on a second asset.

He added that the strategy was to build out a portfolio quickly to give AFIP economies of scale and lower overheads while allowing it to generate returns and maximise the impact on climate mitigation and economic benefits to local communities.

David Brand, chief executive officer, New Forests, said: “New Forests’ new Africa platform will expand the plantation forest sector while seeking to also support forest conservation, restoration of degraded land and expansion of community-based forestry programmes.”

Tellef Thorleifsson, chief executive officer of Norfund, said: “As a long-term investor in Green Resources, Norfund is pleased that the board and management have succeeded in developing the company into what will now be the core of the new fund focussed on developing sustainable growth of the African forestry sector, thereby creating jobs, reducing deforestation and addressing climate change.”

Jaakko Kangasniemi, chief executive officer of Finnfund said: “Sustainable forestry is one key way to curb deforestation as well as climate change. Investing in responsible forestry companies has long been one of Finnfund’s focus areas.”

Clarisa De Franco, managing director and head of private equity funds at BII, said: “The launch of the permanent capital vehicle would increase funding for nature-based solutions, increase the supply of sustainable wood, and restore natural capital while also boosting jobs within rural communities.”

Partnerships for Forests, a UK Foreign, Commonwealth & Development Office-funded programme, will work with AFIP by offering technical assistance.

Baemnet Aschenaki, regional director of Partnerships for Forests, East Africa, said that by supporting identification and development of smallholder-focussed and environmentally-responsible projects around plantations, it aimed to contribute to resilient communities and landscapes on the continent.

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