21 Sept 2010
A new fund in Australia has raised hundreds of millions of dollars to invest in forests in New Zealand and Australia.
New Forests Pty has closed the approximate $A500 million ($NZ648m) Australia New Zealand Forest Fund, which will invest in timberland properties and forestry-related assets in Australia and New Zealand.
The fund's investors include international and regional institutional investors who have identified Australian and New Zealand timberland as an attractive component of their alternative asset portfolio allocation.
"Now is the right time for investors to be weighting toward the timberland asset class because of its low volatility and positive correlation to inflation," David Brand, managing director of New Forests, said.
"Australia and New Zealand's timberland sectors are restructuring as a result of the failure of several forestry managed investment scheme businesses in Australia and the flow on effects of the global financial crisis. This has created a once-in-a-generation change of ownership of the forestry and land asset base - which may be worth $A3 billion-$A4 billion - but the strong underlying market fundamentals of the sector remain, driven by growth in Asia."
The fund's establishment comes after Harvard Management Company (HMC), the manager of Harvard University's endowment and owner of plantation forest assets in New Zealand, recently highlighted natural resources as an area of investment.
HMC is the majority owner of Kaingaroa Timberlands, the second largest owner of plantation forest assets in New Zealand behind US fund manager Hancock Natural Resources Group. NZ Superannuation Fund owns 40% of Kaingaroa Timberlands and it is its largest single investment.
"We believe natural resources is a core strength in our portfolio, offering inflation protection, cash flow and long-term growth," HMC said.
Port of Tauranga has said a 24% rise in log exports helped lift its full-year underlying earnings.
Forestry-related exports through the port rose 19% to 6.04m tonnes in the year to June 30. This includes pulp, paper and timber products. Log exports rose 24% from the previous year.
Chief executive Mark Cairns said log exports were back at 2003 levels. Log exports in July were up 7% on the same month last year.
China has been a big market but in July the port handled more logs destined for Korea than China.
Mr Cairns said the Indian market was also emerging strongly and the Japanese market was bouncing back. "We are seeing a firming of other markets," he said.