Foresight Sustainable Forestry Company (FSF) has defied sceptics of timber funds and raised £130m for its London Stock Exchange listing.
The investment trust – fund manager Foresight Group’s third – will become the 13th closed-end fund to successfully launch this year, although it failed to hit its £200m target.
The initial public offer (IPO) brokered by Jefferies International looks to have attracted only £81m of new money from investors as Foresight Inheritance Tax Fund will be a cornerstone investor, holding up to 30%.
Although the company offered an attractive annual return of at least 5% over inflation from assets not linked to public stock markets and potentially benefiting from a post-COP26 wave of green investment, investor appetite was limited by the poor records of previous UK-listed forestry funds: Phaunos Timber and Cambium Global Timberland (TREE).
With most of its trees based in Scotland, the launch also faced questions over the potential impact of devolution as well as the country’s cooler, wetter climate on the portfolio.
Fund managers Richard Kelly and Robert Guest countered some of this by pointing out the likely growth in demand in the UK for the organic construction material, particularly as this country imports most of the wood it uses.
Richard Davidson, the former Lansdowne Partners hedge fund manager who is the trust’s chair, said: ’Foresight Sustainable Forestry Company offers a unique investment opportunity in UK forestry which has been reflected by the demand we have seen from both institutional and retail investors.’
Bernard Fairman, executive chairman of Foresight Group, which already runs the Foresight Solar (FSFL) and JLEN Environmental Assets (JLEN) investment companies, said: ‘COP26 recently underlined the huge importance of forests and afforestation projects worldwide; the UK is one of the least forested countries in Europe and with its UK focus, this is an investment company which will make a real sustainability, biodiversity and ESG impact in this country.’
A total of 130m ordinary shares at 100p will be issued on the stock exchange’s premium segment and will start trading on Wednesday.