The Wairarapa-based Forest Enterprises (FE) has embarked on a new capital-raise aiming to attract up to $3.4 million for a fund investing in long-term forestry projects in its home region.
In a product disclosure statement lodged last week, the FE Pukekōwhai Forest Investment fund – structured as a limited partnership – will issue up to 80,000 shares (priced at $42.36 apiece) in the long-term pine tree venture.
Under the offer – the third FE fund launched since 2016 – investors will own a stake in the land and replanted forests in four Wairarapa blocks covering a total area of just over 816 hectares: three of the four properties are pre-existing FE forest investment partnerships with original investors able to cash out or take shares in the Pukekōwhai project.
In addition to the upfront share purchase price, investors will face annual ‘calls’ to fund the project over the first 13 years of almost $1,200 (plus two more years at $390) per the minimum 200-share lot.
However, investors won’t see returns for almost a quarter of a century with the fund set to wrap up after 2050.
“The Scheme will conclude in around 30 years when the youngest of the trees are harvested,” the FE disclosure document says. “The main investment return should commence in 23 years (around 2044) when the 2018 age class trees are harvested under the Forest Management Plan and continue for around 7 years until the remaining trees are harvested and Land sold.”
While the long-term nature of forestry renders the investment largely illiquid, FE does offer some facility for investors to exit early.
The Pukekōwhai scheme is not eligible for carbon credits but FE is “pursuing Forest Stewardship Council (FSC) environmental certification for the 20,000-hectare forest estate owned by its Managed Investment Schemes”.
“If successful, Forest Enterprises’ forestry investments – including Pukekōwhai Forest – are likely to become New Zealand’s first investments to be FSC certified,” the group says on its website. “Forest Enterprises already holds FSC Forest Management certification for 15,000 hectares of forestry owned in New Zealand for an international impact investment fund.”
FE, headed by Bert Hughes, has about 35,000 hectares of forest land under management with roughly 2,400 hectares bundled up in the three managed investment schemes launched since 2016 when forestry funds came under the Financial Markets Conduct Act regime.
Established in 1972, the Masterton-headquartered company has over 50 pre-FMC limited partnership funds registered on Disclose.
FE accounts for about 20 per cent of all FMC-regulated ‘other’ managed investment schemes – or those not falling under the traditional managed fund definition: the category includes property syndicates and the like.