Gresham House has raised an initial £127m (€149m) for its forestry fund, with backing from investors including the Scottish National Investment Bank.
The Gresham House Forest Growth & Sustainability Fund’s first close, which includes commitments from two major institutional investors, exceeded the fund’s initial target of £100m, the manager said.
“In light of a strong deal pipeline and timely deployment, we anticipate a second close for the strategy later this year,” the manager said.
Launched in June, the Forest Growth & Sustainability Fund aims to deliver sustainable capital growth through the creation of new productive woodland, whilst providing exposure to existing income-generating forestry in the UK.
The fund will target generating returns through the sale of timber and the capital growth of land and trees, while also producing carbon credits from the creation of new woodland.
Olly Hughes, managing director of forestry at Gresham House, said: “This impressive first close is testament to Gresham House’s long-standing track record in the forestry space and shows clear and growing appetite for the asset class from institutional and private client investors.
“This flexible strategy allows investors to choose to use the carbon credits generated for offsetting purposes or sell the units to generate income. As investors increasingly focus on sustainable investments, forestry is emerging as one of the most impactful solutions, which combats climate change and enhances biodiversity, while also serving as an excellent investment diversifier and producing meaningful uncorrelated returns.”
Eilidh Mactaggart, CEO, Scottish National Investment Bank, said: “The Bank is delighted to cornerstone this new sustainable forestry fund focused on new and diverse planting in Scotland.”
Mactaggart said the new planting element and ability to generate carbon credits represent a novel investment proposition which mainstream investors have yet to fully embrace.
“The bank’s cornerstone investment is designed to encourage other investors to follow us into this new type of forestry fund.
“We, therefore, believe this opportunity to be an excellent fit for the bank’s ambition to lead the way on innovative mission-aligned investments.”
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