A new investment vehicle, True North European Real Estate Partners, has raised its first fund, the Forestry Carbon Sequestration Fund (FCS), dedicated to re-forestation impact investment.
True North was launched in 2019 by Harry Humble of Hunter Property Fund Management to focus on environmental and socially (ESG) motivated real asset strategies.
The closed-end FCS fund has achieved its £30 mln equity target at launch exclusively supported by investment firm Willis Towers Watson. The fund is structured with a co-investment ‘side car’ allowing it to scale up if larger investments are available.
The fund will focus on woodland creation, acquiring agricultural land across the UK to develop as Forestry Stewardship Council compliant commercial forestry. This ecologically beneficial forestry planting is the central element to reaching the fund’s 1.65 million tonne carbon sequestration target.
Humble said: 'Creating value from ESG-led strategies that deliver meaningful returns is central to our investment philosophy at True North and the launch of the FCS fund put us in a strong position to respond to investor appetite for opportunities that lead on environmental impact alongside financial returns.'
Existing constraints on timber production in the UK have impacted on current and future supply, resulting in heavy reliance on oversees imports. The future for UK timber assets is underpinned by the convergence of a structural supply shortage with long term demand growth, particularly as construction fundamentally changes moving to less polluting components.
Land is now being identified that would be suitable for the transition from upland grazing to woodland. According to True North, the move from agriculture, often with a volatile but regular income, to the much longer return horizons of forestry investment requires a change in the type of investor holding the land.
True North chief investment officer and fund manager, James Jackson, added: 'A move from grazing to forestry requires a fundamental change in land ownership and is not a decision that can be made lightly – for landowners or investors.
'This will not be the squares of monoculture sitka spruce of the past; instead sensitive ecological designs will ensure that planting is right for the area in which it is situated and local stakeholders are engaged in that design.
'The fund will focus on land acquisitions and moving each site through design and planting to an establishment phase requiring ongoing management to nurture the crop to maximise both its timber crop yield and the associated carbon sequestration. We are seeking to deliver premium timber that will have long-term use in construction that will lock up carbon beyond harvest.'
