New Forests, a global investment manager of nature-based real assets and natural capital strategies, has announced the first close of its Tropical Asia Forest Fund 2 (TAFF2) with US$120 million of capital commitments. Investors in the first close include sovereign wealth, corporate, philanthropic and development finance capital from Australia, Europe, Japan, the Philippines, Singapore and the US.
TAFF2 is a closed end fund that aims to capitalise on the long-term investment opportunities in sustainable plantation forestry in South East Asia. According to New Forests, it is expected to develop a diversified portfolio of sustainable forest plantation assets in Malaysia, Indonesia, Vietnam, Thailand, Laos and Cambodia for end markets such as timber, rubber and carbon.
New Forests’ investment approach drives value through best practice forestry management, market and supply chain development, implementation of high-quality governance, and leading environmental and social management practices.
Asia has the world’s fastest growing demand for wood products. Investment is required not only in a high-quality and sustainable plantation sector but also in productive landscapes that are integrated with positive climate, biodiversity impacts and sustainable development, to address the region’s sustainability transition.
TAFF2 also includes a unique blended finance structure which will enable TAFF2 to integrate investment in impact activities focused on climate action, community engagement and livelihoods, and biodiversity conservation into TAFF2’s plantation forestry portfolio.
The impact activities are closely linked to the Paris Agreement and the United Nation (UN) Sustainable Development Goals. New Forests’ objective is to demonstrate that asset management integrating commercial forestry investments with activities such as ecosystem restoration, reforestation, and community forestry will lead to better returns, long-term sustainability outcomes, and operational resilience.
David Brand, CEO of New Forests, said: “Asia is central to the economic and sustainability transformations happening in the 21st century. Asia has an important role to play in aligning its growth with climate positive, nature positive, and sustainable development outcomes. The TAFF2 investment strategy has been developed to invest capital in these transformations, using the blended finance structure to mobilise more capital towards high social and environmental impact outcomes.”
Geoffrey Seeto, managing director of New Forests Asia, said: “South East Asia offers institutional investors competitive forestry returns compared to more established markets, diversification into new markets, and the capacity to support the region’s transition to a sustainable, climate-smart forest industry. We are excited to be partnering with leading institutional investors from Asia-Pacific, Europe and the US, who will play a key role in Asia’s forestry sector transitioning towards more responsible forestry management.”
New Forests will continue to raise capital for TAFF2 throughout 2022 and anticipates a second close later this year, with a goal of raising $300m.
New Forests has been investing in South East Asia for over a decade and has an office in Singapore. TAFF2 is New Forests’ second fund dedicated to sustainable forestry in South East Asia after closing the Tropical Asia Forest Fund in 2013.