Foresight Sustainable Forestry has deployed its IPO proceeds and is ready to expand. It is proposing to undertake a placing and an offer for subscription for new ordinary shares at a price of 107 pence per share. It hopes to capitalise on a growing pipeline of potential acquisitions, of which £76.8m is under option or exclusivity.
The largest shareholder, Blackmead Infrastructure Limited, part of the Foresight Inheritance Tax Fund, has committed to subscribe for up to 29.99% of the shares available under the placing.
The majority of the board and both fund managers will also participate in the issue.
The placing constitutes a “Subsequent Placing” under the existing placing programme under the prospectus dated 28 October 2021.
The board believes it is important to ensure that current and new retail shareholders have the opportunity to participate. The offer for subscription is being made under an exemption against the need for an approved prospectus provided for under the Financial Services and Markets Act 2000 and consequently it will not exceed the sterling equivalent of €8.0m. [It is time we got that limit hiked to something more material or abolished altogether.]
State of play
On 13 June 2022, FSF completed the acquisition of Coed Doethie, an afforestation site located in Ceredigion, Wales, with a total area of 115 hectares. The acquired property is well suited for the establishment of a high yielding woodland creation scheme and was acquired for £1.3 million (inclusive of tax and other transaction costs). The company is now considered to have fully deployed the IPO proceeds of £130 million.
Since the IPO in November 2021, FSF has acquired 40 individual properties. The total size of the portfolio is 8,658 hectares, of which 37% by value are afforestation properties. The properties (by value) are located in Scotland (80%), Wales (12%) and England (8%).
Pipeline
The company intends to increase the size of the portfolio by acquiring an imminent pipeline of 22 UK forestry and afforestation assets extending over more than 9,500 hectares, totaling c.£76.8 million of expected deployment (inclusive of tax and transaction costs).·
The exclusive pipeline includes 14 properties, spanning over 6,500 hectares and over £43.2 million of deployment opportunity (inclusive of tax and transaction costs), that all have headline terms agreed with the respective vendors and the company has been granted an exclusivity period to complete its due diligence and conclude the transaction. By value, the exclusive pipeline is split between afforestation (63%) and mixed afforestation and standing forestry (37%) properties. All of the properties in the exclusive pipeline are located in Scotland.
There are also properties under option under an exclusive option agreement with Foresight Inheritance Tax Fund. These comprise an additional eight forestry properties covering more than 3,000 hectares and equivalent to £33.7 million of deployment opportunity (inclusive of tax and transaction costs), valid until 31 December 2022. By value, the option pipeline is split between standing forestry (70%) and afforestation (25%) and mixed standing forestry and afforestation (5%) properties and is all located in Scotland (100%).·
In addition, there is a longer list of further potential acquisition opportunities. These opportunities will include selective on-market standing forestry and afforestation opportunities. At the current time, there are 23 live on and off market opportunities that span over 14,500 hectares with over £73 million of deployment opportunity. Of this, 43% (by value) are afforestation opportunities, 35% are mixed standing forestry and afforestation opportunities and 19% are standing forestry opportunities.
Plus, the company has identified over 4,500 properties that potentially meet its afforestation criteria, covering an area in excess of 860,000 hectares, equivalent to over £10 billion of potential opportunity.·
The company expects to have deployed the net proceeds of the issue within a period of about 6 months from the date of closing of the issue.
Foresight Sustainable Forestry intends to make use of a Revolving Credit Facility (RCF) to help grow the fund. It says that significant progress has been made in securing an RCF on favorable terms. A tender process has been completed and a preferred lender has been selected. The company currently anticipates closing the RCF during the latter part of 2022.
Application forms for the offer for subscription can be found on the company’s website at fsfc.foresightgroup.eu.
Expected Timetable for the Issue
|
Event |
Date |
|
Placing and Offer for Subscription open |
14 June 2022 |
|
Latest time and date for receipt of completed Application Forms and payment in full under the Offer for Subscription |
2.30 p.m. on 23 June 2022 |
|
Latest time and date for commitments under the Placing |
3.00 p.m. on 23 June 2022 |
|
Announcement of results of the Issue |
24 June 2022 |
|
Admission and dealing in New Ordinary Shares commence |
8.00 a.m. on 28 June 2022 |
FSF : Foresight Sustainable Forestry ready to grow