Gresham House forest fund exceeds initial target

Gresham House said on Thursday that the Gresham House Forest Growth & Sustainability Fund had held its first close with £127m in subscriptions, substantially exceeding the initial target of £100m.

The AIM-traded alternative asset manager and investment firm said the fundraise included commitments from two major institutional investors.

It said that, in light of a “strong” deal pipeline and timely deployment, it expected a second close for the fund later in the year, adding that the fundraising efforts came amid rising forestry valuations, and a “growing appetite” from investors to broaden exposure to environmental, social and governance (ESG)-aligned strategies.

Launched in June, the Forest Growth & Sustainability Fund aimed to deliver sustainable capital growth through the creation of new productive woodland, while providing exposure to existing income-generating forestry in the UK.

The board said the strategy of the fund would target generating returns through the sale of timber and the capital growth of land and trees, while also producing carbon credits from the creation of new woodland.

Investors were expected to receive distributions in the form of verified carbon credits that could be retained for 'insetting' purposes - to address carbon emissions in their sphere of influence or portfolio - or sold to provide income.

Managing around 140,000 hectares of forestry worth more than £1.8bn, Gresham House said it was the UK's largest commercial forestry manager.

The business also managed a forestry mandate in Ireland, and expected to complete on a further international forestry mandate in Australia, subject to regulatory approval.

“This impressive first close is testament to Gresham House's long-standing track record in the forestry space and shows a clear and growing appetite for the asset class from institutional and private client investors,” said the company’s managing director of forestry, Olly Hughes.

“This flexible strategy allows investors to choose to use the carbon credits generated for offsetting purposes or sell the units to generate income.

“As investors increasingly focus on sustainable investments, forestry is emerging as one of the most impactful solutions, which combats climate change and enhances biodiversity, while also serving as an excellent investment diversifier and producing meaningful uncorrelated returns.”

At 1350 BST, shares in Gresham House were up 0.45% at 889p.