Asian forestry fund fully invested, follow-on vehicle planned
Tropical Asia Forest Fund (TAFF), managed by Sydney-based New Forests, has made its final investment, acquiring a majority shareholding in one of the largest hardwood plantation estates in Laos.
The fund, which raised US$170m (€160m) in 2013, has now invested in plantations in Laos, Malaysia and Indonesia.
With the fund fully invested, New Forests expects to launch a second fund in September.
David Brand, New Forests CEO, told IPE Real Estate that TAFF has raised its stake to 85% in a Lao business known as Mekong Timber Plantation. The balance is held by the Lao Government.
TAFF manages capital commitments from nine investors, including pension and superannuation funds.
It is the only institutional forestry fund dedicated to investing in sustainably-managed timber plantations in Southeast Asia.
New Forests is raising capital for its Australian New Zealand Fund 3, which is due to close in July. It secured AUD660m (€468m) in its first close in November 2016.
New Forests was founded in 2005. It manages more than AUD3.6 billion in funds, with assets located in Asia Pacific and the US.
“Our Lao plantation will be cash-flow positive in two to three years,” Brand said, adding that eucalyptus trees planted in the 1990s are largely mature now.
By comparison, TAFF plantations in Malaysia and Indonesia are cash-flow negative and will require ongoing capital investment for a number of years.
The fund is replanting its plantation in Malaysia with high quality timber which will take 14 years to mature.
In Indonesia, the plan is to grow 30,000 hectares of world-scale rubber plantation. TAFF so far has planted 14,000 hectares.