WED, 19 OCT, 2022-theGBJournal| New Forests, along with its investment partners British International Investment (BII), Norfund and Finnfund, have signed subscription agreements for their investment in a dedicated African fund, the African Forestry Impact Platform (AFIP), for US$200 million, and announced AFIP’s first acquisition, Green Resources, East Africa’s largest forest development and wood processing company.
This follows an announcement at COP26 around an intention of these groups to partner to develop investment strategies designed to scale and transform the sustainable forestry sector in Sub-Saharan Africa.
AFIP will continue to raise long term institutional capital to support the sustainability and development of Africa’s growing forestry sector, with the aim of raising US$500 million for the Platform in the next two to three years.
AFIP will invest in a portfolio of plantation forestry operating companies and related assets in Sub-Saharan Africa, primarily targeting established assets that can be expected to provide stable and predictable cash flows across a diversified set of markets.
Drawing on New Forests’ unique approach to sustainability, AFIP will focus on four key areas of impact: climate change mitigation, biodiversity conservation, gender and diversity, and community and livelihoods.
Forests and landscapes protect wildlife from natural disasters and are critical for various essential products and services, including fuel, shelter, and food. However, the UN’s assessment found that in Africa, four million hectares of forests are disappearing yearly – conservation and restoration are crucial for inclusive adaptation and building resilient and sustainable ecosystems.
David Brand, Chief Executive Officer, New Forests, said, “Africa has growing economies and rising timber demand but is also home to some of the world’s most biodiverse forests. New Forests’ new Africa platform will expand the plantation forest sector while seeking to also support forest conservation, restoration of degraded land and expansion of community-based forestry programs. As an open-ended investment vehicle AFIP will help to create and perpetuate sustainable landscapes that can balance conservation and production systems.
Tellef Thorleifsson, Chief Executive Officer of Norfund said, “As long-term investors in Green Resources, Norfund is pleased that the board and management has succeeded in developing the company into what will now be the core of the new fund focused on developing sustainable growth of the African forestry sector, thereby creating jobs, reducing deforestation, and addressing climate change.”
Jaakko Kangasniemi, Chief Executive Officer of Finnfund said, “Sustainable forestry is one key way to curb deforestation as well as climate change. Investing in responsible forestry companies has long been one of Finnfund’s focus areas. In addition to the benefits to nature and climate, forestry can significantly contribute to people’s livelihoods – particularly in Africa. The forestry sector in Africa has enormous growth potential and by partnering with fellow development financiers and New Forests, we believe we can together bring the change needed to unlock that potential.”
Clarisa De Franco, Managing Director & Head of Private Equity Funds at BII, said, “BII is proud to be part of this partnership to launch a permanent capital vehicle that will increase funding for nature-based solutions, increase the supply of sustainable wood, restore natural capital while also boosting jobs within rural communities. Addressing the climate emergency in Africa must include gender-smart actions, and we are thrilled that the fund has committed to invest at least 30 per cent of the value of its portfolio in 2X eligible businesses. This will promote inclusive economic opportunities, increase productivity and improve livelihoods across Sub-Saharan Africa.”
Partnerships for Forests, a UK Foreign, Commonwealth & Development Office funded programme, will work closely with AFIP by offering technical assistance. This includes help to identify and develop business models around target investments to demonstrate a different model of working with plantations that provides tangible returns to investors, delivering social and environmental value to smallholders and other landscape stakeholders.
Baemnet Aschenaki, Regional Director of Partnerships for Forests, East Africa, said, “The partnership with New Forests is exciting, given how innovative the investment model is in terms of social inclusivity and environmental protection. By supporting the identification and development of smallholder-focused and environmentally responsible projects around plantations, we aim to contribute to resilient communities and landscapes on the continent.”
The Green Resources acquisition is subject to regulatory approval (in Tanzania) and is expected to be completed by December 2022.
AFIP has been registered in Singapore as a Variable Capital Company (VCC) which is an open ended, permanent capital vehicle. New Forests has had a presence in Nairobi since 2021, and in June that year appointed Paul Ohaga, Senior Director, Africa to lead the business.
New Forests is a global investment manager of nature-based real assets and natural capital strategies, with US$6.5 billion in assets under management across 1.1 million hectares (2.7 million acres) of investments.
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