Gresham House plc – the specialist alternative asset manager – has secured £200m in total commitments following a second close for its Forest Growth & Sustainability LP, as institutional and private investors continue to drive demand for portfolio diversifiers with positive environmental impacts.
Building on a successful first close for the fund in August following its launch in June, the fund has received further commitments led by Worcestershire County Council Pension Scheme, as well as private investors.
The strong institutional demand for forestry is driven by continued return performance and a growing recognition of the diversification potential of forestry investments, as well as their significant contribution to ESG commitments – which are becoming increasingly ambitious across the institutional space.
The Gresham House Forest Growth & Sustainability LP generates returns through the sale of timber and the capital growth of land and trees, while also producing carbon credits by creating new productive woodland. Investors in the strategy receive distributions in the form of verified carbon credits that can be retained for ‘insetting’ purposes – to address carbon emissions in their portfolio or sphere of influence – or sold to generate income.
Gresham House is the UK’s largest commercial forestry manager and manages roughly 136,000 hectares of forestry worth over £1.9bn. The business also manages two international forestry mandates comprising a further c.29,000 hectares for AXA IM, having recently finalised an appointment to manage a 24,800 hectare site in Australia’s Green Triangle.
Olly Hughes, managing director, forestry at Gresham House Asset Management, says: “This latest successful close is a testament to continued investor demand for strategies that can deliver genuine diversification and to Gresham House’s long-established expertise in the forestry sector. The asset class has the potential to provide compelling uncorrelated returns and significant impacts in terms of boosting biodiversity and making a meaningful contribution to carbon sequestration.
As a result of overwhelming investor demand and a healthy deal pipeline, Gresham House have accepted total subscriptions of just over £200m during the year. The acquisitions team is making excellent progress with deployment and a third and final close is expected to take place in the second quarter of 2022.”
Elizabeth Eyre, chair of the Worcestershire County Council Pension Fund Committee, says: “Our latest investment in the Gresham House Forest Growth and Sustainability fund will further support our robust approach to diversification across our portfolio and particularly in our private assets. In light of strong global timber demand, we recognise the compelling investment case for forestry, as well as the emissions benefits it provides through the distribution of carbon credits.”