13.3.1.1 New Forests Tropical Forest Fund LP

Tropical Forest Fund LP (TFF) is a USD 100 million 'closed-end equity fund',1 launched by the company New Forests Asset Management Pty Ltd (New Forests). New Forests is a forestry investment management and advisory firm that makes equity and equity-related investments in sustainably managed natural forests, timber plantations and forestry-related assets. By 2008, New Forests managed USD 200 million in assets throughout Australia, New Zealand, the US and the Asia Pacific region.

TFF is designed to target opportunities in land and forestry assets in the Asia Pacific region, generating bundled payments consisting of a mix of timber revenues and environmental credits.2 More specifically, its aims are:3 (1) to generate returns from timber sales and energy products; (2) to manage land and forestry assets sustainably; and (3) to earn environmental credits such as carbon and biodiversity credits. TFF focuses on existing plantations and forestry assets (50 to 80 per cent) and greenfield plantations' (20 to 50 per cent). The primary revenues of TFF are expected to come from sales of hardwood tropical timber and latex. TFF further expects to generate revenue income streams through investments in processing facilities (<10 per cent), carbon credits (<10 per cent), and natural forest management (<5 per cent). TFF has a pipeline of approximately 20 projects in nine countries that in total account for 200,000 hectares. Although these indications concern projections, the project is mature' in the sense that is has set out to attract investments. For details, see Table 13.1. According to New Forests, forests are attractive assets for institutional investors, because they contribute to portfolio diversification.