SYDNEY – New Forests Pty Limited announces it has secured an option to acquire an 8500-hectare property in New South Wales on behalf of Cambium Global Timberland Ltd (Cambium). This first investment for Cambium is a marquee project as an environmental investment and will provide returns from timber production as well as environmental values, such as the sale of carbon credits.
New Forests’ investment thesis involves shifting the property from grazing, and establishing approximately half of the area to hardwood plantations for sawlogs that can be sold to the rapidly growing markets for high-value native feature grade timber. The remainder of the property will be dedicated to vegetation conservation and revegetation. All reforestation and revegetation activities will be eligible for carbon trading in the New South Wales Greenhouse Gas Abatement Scheme, as well as creating biodiversity-rich carbon credits for sale to the retail carbon market. The acquisition also includes access to 105 million liters of water licenses per annum.
“This acquisition provides a new model for investment in land-based assets that can ultimately deliver strong returns to investors,” says David Brand, Managing Director of New Forests. “Multiple layers of value can be added based on the land’s ecosystem services, as well as traditional production capabilities such as commercial plantations. This marquee transaction exemplifies Cambium’s vision in approaching forestry investment in a more comprehensive way.”
New Forests has an established record in environmental investments, which attracted Cambium to work with New Forests. Cambium is an AIM-listed company established to invest in a global portfolio of forestry-based properties. New Forests assisted with the initial flotation of Cambium in early 2007, and now acts in an asset management role, seeking investments in assets New Forests refers to as ”timber plus”, assets with a core return from timber plus environmental values such as carbon credits.
An important component of the investment is the inclusion of incentive financing from the Border Rivers-Gwydir Catchment Management Authority (BRGCMA). The CMA has identified biodiversity and salinity reduction targets for the region, which this property will contribute to under Cambium ownership and New Forests’ management. To achieve this, the CMA has provided nearly $1 million in financing to support activities that will achieve these targets. This is the largest single investment made by a CMA under an Incentives Property Vegetation Plan through the Native Vegetation Act, 2003 to date.
“The CMA’s investment in the project is an acknowledgement of the environmental benefits that will be accrued through the protection of remnant native vegetation and the broadscale revegetation of parts of the property” said Lisa Roberts, General Manager of the BRG CMA. “The project also represents a partnership between industry and government, with funding through the Natural Heritage Trust and the National Action Plan for Salinity and Water Quality. In addition, there is the opportunity for environmental education and monitoring activities on the property.”
Cambium was launched in early 2007 and is traded on the AIM market of the London Stock Exchange. Cambium is managed by CP Cogent Asset Management, LP, which is wholly owned by Cogent Partners, LP, an independent investment bank specializing in alternative assets.
“Cambium’s first timber holding in Australia is representative of our objective to develop multiple revenue streams from each property,” says Matthew Haertzen, Chartered Financial Analyst for Cogent. “We are confident that the land will not only achieve strong long-term returns from timber production, but will also allow us to capitalize on environmental values in the short term, while making a contribution to improved environmental outcomes.”
New Forests will be acting as the property manager and will oversee forestry operations and environmental activities. In addition to immediate revegetation and NSW scheme accreditation, New Forests will also be pursuing longer term environmental options, such as the development of a wind farm that would generate consistent lease revenue once operational.
Moving forward, Cambium will continue to invest in additional forestry assets or operations which can be managed on an environmentally and socially sustainable basis. Cogent Partners expects to build an optimized portfolio of timberland investments – diversified by location, age, class and species – to generate superior total returns to the fund’s investors. New Forests acts as a global adviser and has a specific acquisitions mandate in Australiasia.
New Forests Pty Limited
New Forests Pty Limited is a forestry investment management and advisory services firm with offices in Sydney, Australia and Washington D.C. The company’s investment thesis is unique in seeking assets that deliver traditional timber returns, as well as returns from emerging environmental markets and preferences, such as certified timber, carbon, biodiversity and water. In addition to world-leading forestry investment expertise in the areas of acquisitions, modeling, operations, silviculture and ecosystem services, New Forests is at the forefront of developing and commercializing environmental products and evaluating opportunities from emerging environmental markets. The company holds an Australian Financial Services License. For more information, please see www.newforests.com.au.
Cogent Partners is a leading private equity-focused investment bank that specializes in secondary market transactions and related private equity research products for institutional investors. Recognized globally as the leader in private equity sell-side advisory services, Cogent Partners has earned a reputation for successfully initiating, marketing, negotiating, structuring and closing the sale of private equity assets. Since inception, the company has advised on more than $12 billion in private equity commitments. The firm’s research group offers a range of private equity monitoring and due diligence services. Cogent Partners is headquartered in Dallas, with offices in New York, London and Tokyo. For more information, please visit www.cogent-partners.com.