The Gresham House Forest Growth & Sustainability Fund has held its first close with £127m in subscriptions, substantially exceeding the initial target of £100m.
In light of a strong deal pipeline and timely deployment, Gresham House anticipates a second close for the strategy later this year. These fundraising efforts come amid rising forestry valuations and a growing appetite from investors to broaden exposure to ESG-aligned strategies.
Launched in June of this year, the Forest Growth & Sustainability Fund aims to deliver sustainable capital growth through the creation of new productive woodland, whilst providing exposure to existing income-generating forestry in the UK.
The strategy will 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 are expected to receive distributions in the form of verified carbon credits that can be retained for ‘insetting’ purposes – to address carbon emissions in their sphere of influence or portfolio – or sold to provide income.
Managing roughly 140,000 hectares of forestry worth more than £1.8bn, Gresham House is the UK’s largest commercial forestry manager. The business also manages a forestry mandate in Ireland and expects to complete on a further international forestry mandate in Australia, subject to regulatory approval.
Olly Hughes, managing director of forestry, Gresham House, (pictured) says: “This impressive first close is testament to Gresham House’s long-standing track record in the forestry space and shows clear and growing appetite for the asset class from institutional and private client investors. 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.”
Eilidh Mactaggart, chief executive officer, Scottish National Investment Bank, who are investing in the fund commented: “The Bank is delighted to cornerstone this new sustainable forestry fund focused on new and diverse planting in Scotland. Gresham House is an experienced forestry fund manager, and we are very excited to support them in this new venture. The new planting element and ability to generate carbon credits represents a novel investment proposition which mainstream investors have yet to fully embrace. The Bank’s cornerstone investment is designed to encourage other investors to follow us into this new type of forestry fund. We therefore believe this opportunity to be an excellent fit for the Bank’s ambition to lead the way on innovative mission aligned investments.”