New forestry investment platform Family Tree Impact Investments has said it plans to invest €50m buying harvesting rights over the next three years.
The new platform, which is operated by sustainable forestry manager NewGen Forestry, will acquire forestry harvesting rights from existing plantation owners - both farmers and private forest owners.
FTI offers a new and innovative income stream to forest owners and also takes a long-term view compared to the traditional forestry model, with greater focus on the environmental benefits that the forests can deliver for communities and investors.
In return for the acquisition of harvesting rights, FTI offers landowners the chance to receive up to 30% of the forest value upfront, with the balance being paid over 20 years in an annuity-like, inflation linked, income stream.
NewGen will focus initially on forests that have come to, or are close to, the end of the Government's Forest Service Premium scheme - plantations that are 15 years old, or more.
Unlike a traditional forest sale, the owner does not have to sell the underlying land. Instead NewGen will take over management of the existing forestry, removing all future operational costs, including insurance and managing licensing and environmental approvals and reporting.
It will also provide a reforestation payment to replant the forest along with offering the landowner the option of an innovative payment mechanism to secure the second rotation.
FTI and NewGen Forestry have secured backing from institutional investors and private offices and aim to acquire the harvesting rights of 2,000 hectares of land in its first year of operations. It also has plans to build a minimum portfolio of €50m of assets by 2023.
NewGen Forestry is led by former Green Belt Forestry CEO John O’Reilly. Its seed investors include the O'Kane Family, the founders of Mercury Engineering, and David Hourihane, who previously led the setting up of the €78m Government backed Ireland Energy Efficiency Investments.
The bulk of forestry in Ireland is based on conifer plantations, but once the existing trees are harvested New Gen plans to plant a more balanced mix of traditional commercial species and native hardwood trees.
John O’Reilly, chief executive of NewGen Forestry, said NewGen and FTI provide the perfect match between landowners looking to obtain a hassle-free income from their forestry, and investors who want a long-term sustainable investment with attractive yields.
"We plan to deploy €8-10m acquiring harvesting rights this year, and to build a portfolio worth over €50m within three years," he added.
The forestry sector employs 12,000 people and contributes €2.3 billion a year to GDP. The annual turnover of the wood processing sector was €800m in 2019, and this is expected to double by 2035.