Sustainable Forestry Fund Closes With Over US$200 Million For Sustainably Managed Forests in Australian and New Zealand

German multinational insurance company Munich Re Group’s asset manager MEAG announced the first closing of its MEAG Sustainable Forestry Equity Fund, with capital commitments to the tune of US$207 million coming from German insurers and the pension scheme of a DAX-listed company group.

The first investments are scheduled for the first half of 2024, with the fund’s global investment strategy prioritising established professional markets that offer investors an attractive risk/return ratio.

The focus lies on forested land in the USA, New Zealand and Australia. In addition to the regional risk-spreading, diversification within the investment class is ensured, among other things, by the variety of woods and usage types covered.

The fund discloses in accordance with Article 9 of the EU Disclosure Regulation (SFDR), and accordingly has a sustainable investment strategy. It invests in ecologically sustainable forest management within the meaning of the EU Taxonomy, while at the same time contributing to several sustainability goals of the United Nations (SDGs). Five percent of the MEAG Sustainable Forestry Equity Fund’s asset volume are to be invested in new afforestation, and its target volume is US$500-700 million.

Thomas Bayerl, MEAG Managing Director and Global Head of Illiquid Assets said: “MEAG has decades of experience with forestry investments around the globe, and these have proven to be an important stability factor in our portfolio. In view of the challenging conditions on capital markets right now, we are even happier about the success of the fund’s first closing with more than 200 million US dollars.”

One feature of forest investments is their low correlation with other investment classes. This is partly because trees grow irrespective of what is happening on capital markets.

On top of this comes the long-term potential for value growth due to the globally rising demand for wood, fuelled in particular by the trend towards sustainable construction and materials.