UK alternative manager announces first close of forestry fund
London-based alternative investment manager Gresham House has announced the first close of the Gresham House Forestry Fund LP.
Gresham House has raised over £15m (€16.6m) of commitments from university college endowment funds, family offices and private individuals. The manager invested £1.25m (€1.39m) of its assets in the fund.
Richard Davidson, former CIO and chief European equity strategist for Morgan Stanley, will manage the fund with support from the Gresham House dedicated forestry team.
The Fund will target net returns of 10% per annum, including an expected annual income distribution of 2% to 4% from timber sales.
Gresham House targets the fund’s final close in the second half of 2017 with £50m (€55.5m) of assets.
Rupert Robinson, managing director of Gresham House Asset Management, believes forestry as an alternative asset class is gaining popularity amongst institutional and private investors.
He said: “As investors increase allocations to real assets, timber is being recognised for its compelling investment credentials: It is a physical asset that generates income, gives inflation protection, is lowly correlated to equities and bonds, and importantly, trees grow irrespective of whether financial markets are rising or falling.
“Launching the fund is in line with our strategy to grow assets under management organically. It provides investors with access to a ‘green’ investment that has significantly outperformed equities, bonds and real estate over the last ten years and enables private individuals to pass on wealth from one generation to another free of inheritance tax.”
Richard Davidson, fund manager of the Gresham House Forestry Fund, commented: “As a medium to long term investment, forestry is generally low risk as it is underpinned by unique return drivers: Trees grow both in volume and value as they mature and a looming supply shortfall of timber in the UK will, we believe, push up timber prices.
“On top of that, renewable energy projects such as wind farms have provided an alternative income source. Unsurprisingly forestry’s historic returns, ESG credentials and tax incentives have piqued investors’ interest. While once considered a niche investment, UK forestry is emerging from the shadows into the mainstream investment landscape.”
Gresham House had £359m (€398.7m) of assets under management as of 31 August 2016.