True North raises dedicated forestry fund
True North European Real Estate Partners (True North) has raised its first fund, the Forestry Carbon Sequestration Fund (FCS fund), dedicated to re-forestation impact investment.
True North was launched last year to focus on environmental and socially (ESG) motivated real asset strategies.
The closed-end FCS fund has achieved its GBP30 million equity target at launch exclusively supported by investment firm Willis Towers Watson. The fund is structured with a co-investment ‘side car’ allowing it to scale up if larger investments are available.
The fund will focus on woodland creation, acquiring agricultural land across the UK to develop as Forestry Stewardship Council compliant commercial forestry. This ecologically beneficial forestry planting is the central element to reaching the fund’s 1.65 million tonne carbon sequestration target.
Decades old constraints on timber production in the UK have impacted on current and future supply, resulting in heavy reliance on oversees imports. The future for UK timber assets is underpinned by the convergence of a structural supply shortage with long term demand growth particularly as construction fundamentally changes moving to less polluting components.
True North was set up in 2019 by real estate capital markets veteran Harry Humble in response to increasing institutional investor demand for opportunities leading on environmental and social impact rather than addressing these issues as a passive reporting function to legacy investment strategies.
True North founder, Harry Humble, says: “Creating value from ESG led strategies that deliver meaningful returns is central to our investment philosophy at True North and the launch of the FCS fund put us in a strong position to respond to investor appetite for opportunities that lead on environmental impact alongside financial returns. We have been fortunate to have found in Willis Towers Watson a major investor leading on ESG investment but also able to work with an emerging manager through the establishment of a maiden fund.”
Land is now being identified that would be suitable for the transition from upland grazing to woodland, with the FCS fund working with landowners looking either to reduce the parts of their holdings that are more challenging for agriculture or retiring from the industry entirely. The move from agriculture, often with a volatile but regular income, to the much longer return horizons of forestry investment requires a change in the type of investor holding this land.
True North CIO and Fund Manager, James Jackson, adds: “A move from grazing to forestry requires a fundamental change in land ownership and is not a decision that can be made lightly – for landowners or investors. This will not be the squares of monoculture sitka spruce of the past; instead sensitive ecological designs will ensure that planting is right for the area in which it is situated and local stakeholders are engaged in that design. The fund will focus on land acquisitions and moving each site through design and planting to an establishment phase requiring ongoing management to nurture the crop to maximise both its timber crop yield and the associated carbon sequestration. We are seeking to deliver premium timber that will have long term use in construction that will lock up carbon beyond harvest.”
Douglas Crawshaw, Head of EMEA Real Estate Manager Research at Willis Towers Watson, says: “True North brought this fund strategy to us early and it fitted well with our desire to deploy capital to emerging trends in real asset space that create value out of ESG led investment.”