Norwegian municipal pensions giant KLP is investing NOK200m (€19.7m) in a new follow-on fund to Silvestica Green Forest.
Swedish bank SEB and CRK Forest Management have set up a new fund to succeed Silvestica Green Forest, which was launched in 2017 and has now reached its investment target of €500m, the two parties said.
The new fund, Silvestica 2 Green Forest, has a similar focus to the first fund - to acquire forest land in Sweden, Finland and the three Baltic countries, SEB and CRK said.
KLP, which invested a total of NOK1.5bn in the first Silvestica Green Forest fund, said it would invest NOK200m in the second fund.
Harald Koch-Hagen, KLP’s head of strategic asset allocation, said: “Investments in forests are very long-term and fit in well with KLP’s need for investments with stable, long-term and good returns.”
He said the NOK872.5bn pension fund had a strategy of increasing climate-friendly investments, and Silvestica’s sustainability strategy was in line with these aims.
“With good experiences from the first Silvestica company, we are happy to continue and invest more money in forestry,” he said
SEB and CRK said the fund’s management had to manage and refine the forest holdings responsibly and sustainably in order to achieve high-value growth and a stable direct return.
The goal is for Silvestica 2 Green Forest to own forest land to a value corresponding to approximately €500m within four to six years, they said.
The fund is primarily aimed at major institutional investors and the anchor investors include Gamla Livförsäkringsaktiebolaget SEB Trygg Liv and KLP, it said.
Karl Danielsson, chair of CRK Forest Management, said the first forest acquisitions for the second fund had been completed before the turn of this year.
Rickard Lehmann, chief executive officer of CRK Forest Management, confirmed to IPE Real Assets that the first fund had made an annualised return of 14.3% between 2017 and 2020, which was higher than the expected return of 5-7% a year.
Silvestica Green Forest had also removed 204,000 tonnes of CO2 from the atmosphere, he said.
The forestry fund acts as a hedge against inflation for its investors, he said, since wood prices follow the inflation on average over time.