Asset manager Gresham House has closed its latest UK forestry fund with £375m (€447m) in capital commitments.
Forest Fund VI is Gresham House’s largest-ever forestry fund and capital was secured from investors including London CIV, Wales Pension Partnership and a Japanese investor, the manager said.
As previously reported, South Yorkshire Pensions Authority committed £50m to Forest Fund VI, which aims to generate an 8% internal rate of return through the harvesting and sale of sustainable timber.
Forest Fund VI expects to invest in a mix of unplanted land for developing productive woodlands and established forests in the UK. The fund’s current asset portfolio comprises just over 6,000ha across 12 properties in Scotland and Wales.
Olly Hughes, managing director of forestry at Gresham House, said: “This milestone fundraise is a clear reflection of the increasing global recognition of European forestry as a compelling asset class. UK and European forestry offers a unique combination of natural-capital growth and long-term income streams, underpinned by the biological growth of trees and the security of underlying land ownership.
“As the transition to a lower-carbon economy accelerates, demand for sustainably sourced timber continues to rise, driven by government initiatives and the growing adoption of wood-based construction materials. Gresham House Forest Fund VI LP enables investors to capitalise on these structural trends while making a tangible impact through carbon sequestration and biodiversity enhancement.’
Councillor Elwyn Williams, chair of the joint governance committee, on behalf of the investing member funds of the Wales Pension Partnership, said: “Forestry offers the compelling combination of uncorrelated financial returns and measurable environmental benefits – from boosting biodiversity to contributing meaningfully to carbon sequestration.
“We are particularly pleased that this fund includes exposure to forestry assets in Wales which will not only support environmental objectives but also help create rural jobs and sustain local economies.”
Vanessa Shia, head of private markets at London CIV, said: “Gresham House Forest Fund VI LP will deliver stable, long-term returns for our clients while actively tackling climate change and supporting ecosystem preservation.
“We view forestry as a core asset class and a key pillar of our LCIV nature-based solutions fund. Gresham House brings the expertise and proven track record needed to manage these assets responsibly and at scale.”
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