British pension funds invest £375 million in Gresham House's forestry investment scheme
Gresham House's Forest Fund VI Secures Significant Investment from UK Pension Schemes
Gresham House's Forest Fund VI, a forestry investment fund managing approximately 6,000 hectares across 12 properties in Scotland and Wales, has attracted considerable interest from UK pension schemes. The fund has secured commitments totalling £375m from the UK Local Government Pension Scheme (LGPS) and an investment pool, with investments coming from various entities such as London CIV, several funds within the Wales Pension Partnership, and an unnamed Japanese investor.
The focus on forestry and greenfield assets has been a strategic priority for the fund over the past year, as highlighted by Vanessa Shia, head of private markets at London CIV. This strategy aligns with the increasing focus on environmental, social, and governance (ESG) aligned investments by pension funds, as part of their long-term investment strategies.
The investment in Forest Fund VI offers uncorrelated financial returns and measurable environmental benefits, according to Elwyn Williams, chair of the joint governance committee. These benefits include boosting biodiversity, contributing to carbon sequestration, and supporting rural economies. The fund is expected to sequester 4.7 million tonnes of CO2 over the next 25 years.
Gresham House, the fund manager, brings the expertise and proven track record needed to manage these assets responsibly and at scale. The fund generates income through sustainable timber harvesting, land value appreciation, revenue from renewable energy development, and operation on the forest sites.
The LGPS in England and Wales holds assets of £391m, with 86 funds belonging to the scheme and it has eight investment pools. Forest Fund VI's target return is in line with expectations for core forestry and agriculture strategies, with a target return of 6-8% net, and a 2% cash yield.
For London CIV, forestry is a core asset class and a key pillar of their LCIV Nature Based Solutions Fund. The Wales Pension Partnership, representing all eight LGPS funds in Wales, also participates in investments like Forest Fund VI, which aligns with sustainable forestry investment themes.
Although the exact performance metrics and detailed strategy parameters are not explicitly documented, the investment strategy of Forest Fund VI is centered around sustainable UK forestry investments aimed at long-term stable returns. The fund's first close has been completed, marking a significant milestone in its development.
- The strategic priority of Gresham House's Forest Fund VI, as Vanessa Shia, head of private markets at London CIV, highlights, is aligning with the increasing focus on environmental, social, and governance (ESG) aligned investments by pension funds, which includes climate-change mitigation efforts such as forestry and greenfield assets.
- The investment in Forest Fund VI, according to Elwyn Williams, chair of the joint governance committee, not only offers uncorrelated financial returns but also measurable environmental benefits, contributing to carbon sequestration and supporting biodiversity and rural economies.
- Forest Fund VI's investment strategy, while not explicitly documented, is centered around sustainable UK forestry investments aimed at long-term stable returns, with the potential to generate income through sustainable timber harvesting, land value appreciation, renewable energy development, and operation on the forest sites, making it an attractive option for entities interested in environmental-science based investments.
