Sydney-based funds manager New Forests has announced a $US120 million ($160 million) first close for its Tropical Asia Forest Fund 2 (TAFF2).
The closed-end fund, which has a $US300 million target, is to be invested in sustainable plantation forestry in South-East Asia.
New Forests said commitments to TAFF2 have so far come from sovereign wealth, corporate, philanthropic and development finance bodies from Australia, Europe, Japan, the Philippines, Singapore and the US.
The Australian government, the Asian Development Bank, David and Lucile Packard Foundation, Sumitomo Mitsui Trust Bank, Temasek and TotalEnergies are among the investors.
New Forests plans continue capital raising for TAFF2 thr4ough the rest of 2020.
According to New Forests, Asia has the world’s fastest growing demand for wood products. The firm says it requires its investments in plantation timber to be not only sustainable but to make positive impacts on climate, biodiversity, and the welfare of communities. The firm’s impact strategies reflect the Paris Agreement and the UN Sustainable Development Goals, it says.
TAFF2 is expected to invest in developing plantations in Malaysia, Indonesia, Vietnam, Thailand, Laos and Cambodia. The investments will produce timber, rubber and carbon offsets.
New Forests chief executive David Brand said: “Asia is central to the economic and sustainability transformations happening in the 21st century. Asia has an important role to play in aligning its growth with climate positive, nature positive and sustainable development outcomes. The TAFF2 investment strategy has been developed to invest capital in these transformations, using a blended finance structure to mobilise more capital towards high social and environmental impact outcomes.”
TAFF2 is New Forests’ second fund dedicated to sustainable forestry in South-East Asia. The first TAFF fund closed in 2013.