Foresight Sustainable Forestry Company PLC, a forestry assets investment company, plans to list in London via an initial public offering of up to 200mln new shares at 100p each.
The IPO will take the form of an institutional placing and IPO investors will be investing alongside the Foresight Inheritance Tax Fund, which will be a cornerstone shareholder with up to 29.99% of Foresight Sustainable Forestry’s shares.
The company said its strategy is to invest in sustainably managed commercial forestry assets, including afforestation assets. It intends to carry on business as an investment trust and targets a net asset value total return of more than CPI inflation + 5% a year on a rolling five-year basis once substantially invested.
The proceeds from the IPO are estimated to directly enable 4mln tonnes of carbon sequestration from the atmosphere from new afforestation planting.
“The company will seek to make a direct contribution in the fight against climate change through forestry and afforestation carbon sequestration initiatives and will seek opportunities to preserve and enhance natural capital and biodiversity across its portfolio,” it said.
Foresight Sustainable Forestry will be managed by Richard Kelly and Robert Guest of infrastructure and private equity manager Foresight Group LLP. The board will comprise Richard Davidson as chairman, Josephine Bush, Sarika Patel and Christopher Sutton. Davidson has a near 20-year track record investing in UK forestry, the company said.
Foresight Group said it has been tracking the UK and European forestry sector as an investment target since 2016. It has managed the acquisition of or holds exclusivity over 11,700 hectares of UK forests and afforestation opportunities valued at £130mln - the seed assets. In addition, it observes an annual forestry deal flow of over £300mln and has a live pipeline of forestry investment opportunities in excess of £125mln.
Commenting on the listing, Foresight Sustainable Forestry’s prospective chairman Davidson said: "Forestry provides a compelling investment opportunity, meeting investor requirements on climate, sustainability and ESG issues, inflation protection properties and portfolio diversification.
“Over the long term, managing a portfolio of forestry assets is generally low risk, driven by growth in both volume and value as the trees mature.
“We expect the significant shortfall in timber in the UK to push up timber prices in the coming years and are delighted to have Richard and Robert to manage the portfolio on behalf of shareholders, overseen by a strong independent board."
Bernard Fairman, executive chairman and co-founder of Foresight Group, said: "For some years now Foresight, as one of a very few significant players in this sector, has been looking to scale up its forestry investments in an appropriate structure for a wide range of investors to participate in and this LSE Main Market listed sustainable forestry company launch represents the next development in that journey.
“In the UK, we import the vast majority of our sawn timber requirement, a situation which is not sustainable. The UK and global economies are re-opening and demand for timber is pushing significantly ahead of supply. There is an enormous drive for us all to use more sustainable building and other products. With international recognition that sustainable forestry and afforestation can play a vital role in combatting climate change through net C02 emissions reductions, we truly believe that this is very much a fund of its time."