UK Local Government Pension Scheme (LGPS) funds and an investment pool have committed £375m to a forestry fund managed by Gresham House.
The fund manager today (28 May) announced the first close of Forest Fund VI, with commitments from the £32.8bn London CIV, several funds within the £25bn Wales Pension Partnership, and an unnamed Japanese investor.
The LGPS in England and Wales holds assets of £391m,with 86 funds belonging to the scheme and it has eight investment pools.
Vanessa Shia, head of private markets at London CIV, one of the eight investment pools, said: “We view forestry as a core asset class and a key pillar of our LCIV Nature Based Solutions Fund. Gresham House brings the expertise and proven track record needed to manage these assets responsibly and at scale.”
Speaking to Net Zero Investor in January, Shia explained that forestry and greenfield assets have been at the forefront of the fund’s strategy over the past year. She stated the pool's natural capital fund's target return is 6–8% net, with a 2% cash yield, which aligns with expectations for core forestry and agriculture strategies.
According to Gresham House, the fund currently holds just over 6,000 hectares across 12 properties in Scotland and Wales.
It reports an internal rate of return of 8%, generating income through sustainable timber harvesting and land value appreciation, alongside revenue from renewable energy development and operation on the forest sites. The fund is also expected to sequester 4.7m tonnes of CO₂ over the next 25 years.
Elwyn Williams, chair of the joint governance committee, speaking on behalf of the investing member funds of the Wales Pension Partnership, said: "Forestry offers the compelling combination of uncorrelated financial returns and measurable environmental benefits – from boosting biodiversity to contributing meaningfully to carbon sequestration.
“We are particularly pleased that this fund includes exposure to forestry assets in Wales, which will not only support environmental objectives but also help create rural jobs and sustain local economies.”
