The Company’s objective is to provide shareholders with low-risk and high-quality long-term real returns, combining long-term capital appreciation, income yield and significant social impact. Investments include biological assets, timberland-related assets, and associated rural real estate activities.
Investment policy
We intend to have every one of our forestry operations certified by the FSC, or, where relevant, another equally reputable forest management certification scheme. We will do this by implementing due diligence processes and requiring a forest audit based on international and regional standards to ensure that all assets acquired by the Company will be eligible to receive appropriate certification.
Each project should be substantial enough to require at least a USD 5 million capital commitment from the Company to ensure that the investments can be managed cost-efficiently.
The Company will seek to maintain a suitably diversified portfolio of investments to manage its economic exposure to any counterparty, single project or separate legal entity.
The Company will invest in a project only when the investment manager believes that the project has the possibility to generate a minimum real IRR (internal rate of return) of 8% per annum over the duration of the investment (on an unleveraged basis).
The Company will seek to invest in projects that serve different end-markets and different value chains to reduce the Company’s overall sensitivity to developments in the different value chains that consume the Company’s wood fibre.
There are no set species diversification limits. However, the Company aims to diversify its investments into different species in order to reduce its exposure to extreme weather, species-specific diseases and price movements in specific end-markets.
There are no set geographical diversification restrictions. However, the Company will have regard to the benefits of geographical diversification in relation to its investments and the management of its regulatory risk, currency risk, political risk, environmental policy risk, and risk from adverse natural events.
There are no set age class diversification limits. However, the Company seeks to invest in projects with different levels of maturity and times-to-harvest with the aim of smoothing cash flows.
Where possible, we invest in forest assets through SPVs (special-purpose vehicles) via a structure of subsidiaries, set up for each respective project. The Forest Company seeks to enter agreements in which it either holds a controlling stake in the investment vehicle or has a minority stake but has secured satisfactory protections to its minority stake. The Company may invest in partnership with a major wood-consuming industrial company, with an existing landowner, or independently. The Company intends, where suitable, to enter long-term wood sale agreements with leading companies as partners. However, long-term wood sale agreements will represent only one part of overall sales.