New Forests sets its sights on the Asian responsible investment market
14 March 2016
Category: News, Asia, Australia, Global, Japan, USA, Thailand, Europe, Indonesia, Vietnam, New Zealand
By Hui Ching-hoo
New Forests, a Sydney-based sustainable real assets investment specialist, is pressing ahead with its responsible investment approach in Asia to capitalise on growing institutional interest in environmental, social and governance (ESG) investments in the region.
David Brand, chief executive officer at New Forests, tells Asia Asset Management that the company is primarily engaged in managing a diverse set of forestry investments in the US, Australia and New Zealand. Over the years, the business has seen substantial growth and now has A$2.8 billion (US$2.1 billion) in total AUM, since its inception in 2005 with total AUM of A$50 million.
The growth was partly fuelled by its Asian expansion. In 2013, New Forests established its footprint in Asia with the launch of its first institutional investment fund, the Tropical Asia Forest Fund (TAFF), dedicated to sustainable forestry in tropical Southeast Asia with $170 million of committed capital from pension funds and developed banks.
In December 2015, TAFF formed a joint venture with Indonesia-listed PT Sampoerna Agro Tbk to invest in an Indonesian rubber plantation. The investment includes an environmental & social agreement (ESA) that accompanies the shareholder’s agreement and covers the implementation of ESG measures.
Mr. Brand believes that Asian institutional investors have become more aware of the significance of ESG. From an operational perspective, institutional investors could benefit from ESG investment by realigning their corporate structure to their communities and the economic outcomes of their investments.
“New Forests doesn’t have any Asian clients at this stage. The majority of our clients are currently sourced from European pension funds, reinsurance and insurance companies, and endowment funds, but we’re definitely looking to grow and diversify our client base going forward,” he reveals.
To further expand its turf in Asia, New Forests introduced Mitsui & Co (Mitsui) as its major shareholder in late February, where the Japanese conglomerate acquired a 22.5% stake in New Forests.
“Since Asia will be the source of our strategic growth, we decided to bring in an Asian shareholder. With this partnership, Mitsui will help us to tap into [the] Japanese institutional investment market. Japan is probably one of the largest institutional markets with [the] lowest exposure to forestry investment,” Mr. Brand explains. He adds that the partnership will aid the strengthening of New Forests’ presence in the region: “Mitsui has [a] very strong presence in Indonesia, Vietnam and Thailand, and we’re able to leverage on its local business network to explore the markets.”
According to figures from New Forests, institutional forestry investment, which includes funds, direct investments and timber real estate investment trusts, has grown to more than $100 billion over the past 30 years.