Reuters, PlanetArk 29 Oct 09;
Forests are a growing investment prospect as climate incentives place new value on wood chips and standing trees, say fund managers.
An economic recovery will also drive demand for more traditional products such as pulp and lumber, investors say.
Following is a summary of some recent forest fund-raisings and deals.
1. Phaunos Timber Fund
Funds: $550 million
Regional focus: owns and manages 17,000 hectares in Brazil, and land elsewhere in East Africa and Uruguay.
Strategy: Plant on grassland sites. Focus is commercial forestry. "Not in the business of carbon" offsets but wood fuel will in the future be a "huge part" of their business.
Expected returns: 8-12 percent annual returns over 5-6 years
2. South Africa's Standard Bank to launch a fund
Funds: expected A$250 million ($230 million)
Regional focus: Australia
Strategy: sell carbon offsets to companies facing emissions limits under Australia's prospective carbon trading law. Will fund planting and management of 50,000 ha
Expected returns: N/A
3. Oil firm BP
Funds: paying $2.5 million
Regional focus: Australia
Strategy: fund a eucalyptus plantation, and earn a share of resulting carbon offsets
Expected returns: N/A
4. U.S. forest managers Trilogy Green Forest Partners and Westbury Capital Partners
Funds: target $100 million
Regional focus: south-east United States
Strategy: Manage forests for timber and pulp. Also expect growth in wood pellet and carbon offset revenues
Expected returns: exceeding 15 percent over 12-15 years
4. Brazilian beef group J&F, ag. firm MCL, and two pension funds
Funds: created a $600 million capitalised company, Florestal
Regional focus: Brazil
Strategy: supply wood for industrial fuel use
Plant eucalyptus on 335,000 hectares of degraded pastures to supply wood chips for power generation
Also expect to earn carbon credits in the future, given that a hectare of eucalyptus absorbs 12.5 tonnes of carbon per year, executives said.
Expected returns: N/A
5. Clenergen
Funds: raising $30 million
Regional focus: Guyana, India and Ghana
Strategy: planting fast-growing bamboos, trees and shrubs, to produce biomass fuel for domestic and export energy markets
Expected returns: 30-56 percent annual returns over 8 years
(Editing by James Jukwey)
