Averon Park announces proposed acquisition of Foresight Sustainable Forestry

The boards of Foresight Sustainable Forestry Company (FSF) and Averon Park Limited are pleased to announce that they have reached agreement on the terms of a recommended acquisition. Arizona Bidco, a wholly-owned indirect subsidiary of Averon Park, will acquire the entire issued and to be issued ordinary share capital of FSF that the Averon Park Group does not already own for 97p per share.

The offer price represents:

• a premium of approximately 32.88% to the closing price of 73.0 pence per FSF share on 28 May 2024;
• a premium of approximately 43.28% to the volume weighted average price of 67.7 pence per FSF share for the three-month period ended 28 May 2024
• a premium of approximately 44.24% to the volume weighted average price of 67.3 pence per FSF share for the six-month period ended 28 May 2024; and
• a discount of approximately 5.09% to the unaudited net asset value of FSF as at 31 March 2024 of 102.2 pence per FSF share.

[QD comment: This announcement is yet another example of a trust which is trading significantly below NAV being snapped up. The sustained discount made little sense given the company’s exposure to freehold land and meant FSF has been unable to raise capital to fund further growth, with Averon Park believing that FSF will be better able to achieve its aspirations with better access to capital as a private vehicle.]

The cash offer values the entire issued ordinary share capital of FSF at approximately £167m.

The strategic rationale for the transaction is outlined in full below.

Strategic rationale

• Averon Park’s board of directors believes that forestry represents an attractive asset class to diversify investors’ portfolios, protect against inflation and offers an opportunity to benefit from trends in favour of home-grown timber production. Alongside these benefits, forestry provides significant environmental and social benefits that are important in their own right and appeal to many investors.
• Averon Park is a long-term private investor with a diverse portfolio of investments in sustainable infrastructure and real asset backed businesses. Averon Park has significant experience in the specialised UK forestry sector as it is already a substantial investor in UK forestry, agriculture and sustainable land assets, having invested in forestry assets since 2020 and currently owning 7,292 hectares of UK forestry in addition to its indirect holding in FSF.
• The Averon Park board is pleased by the progress made by FSF so far under the management of the Investment Manager, and strongly believes in the long-term potential for FSF to deliver on its investment objective. However, given the adverse macroeconomic backdrop affecting the UK investment trust market, as reflected by the discount to NAV at which FSF shares and the wider investment trust market have been trading over the past 12 months, the Averon Park board believes that there is a low likelihood of this potential being reflected in the FSF share price in the medium-term.
• FSF’s persistent share price discount to NAV has prevented FSF from raising further funds to continue its growth as a publicly traded company and improve liquidity for investors. The Averon Park board wishes to allocate further capital of Averon Park to UK forestry and afforestation assets and believes that FSF will be better able to achieve its growth aspirations with better access to capital as a private vehicle.
• FSF aims to make a direct contribution in the fight against climate change. Averon Park shares this goal and is well placed to support FSF’s existing portfolio in its next phase of growth, having owned certain of FSF’s assets prior to its IPO in November 2021.

FSF : Foresight Sustainable Forestry acquired by Averon Park