Investment trust insider on Foresight Sustainable Forestry – James Carthew: A new forestry fund that looks sensible and sustainable
I was pleased to see the recent intention to float announcement from Foresight Sustainable Forestry. The investment company is looking for between £130m and £200m to invest in a portfolio of forests across the UK with a bias to Scotland. It has a seed portfolio lined up which will come from an existing Inheritance Tax Solutions fund run by the same managers. That fund will act as a 29.9% cornerstone investor in the new trust.
With the seed portfolio, Foresight reckons it can commit all of the flotation proceeds within nine months to a year.
Previous investment companies launched in this area promised high yields and high returns but struggled, and the subsector looked set to disappear. However, the Foresight fund seems a more sensible proposition. It is targeting a return of 5% above UK inflation as measured by CPI and will not build debt into its structure as a way of enhancing returns.
The publication of a prospectus is still a couple weeks away, but I had the opportunity to talk to Richard Kelly, one of the fund managers, last week to get some colour on what the fund is trying to achieve.
Investing in forests and woodland in the UK has mainly been the preserve of wealthy individuals and families as these assets can qualify for business property relief for inheritance tax purposes. The proposed Foresight fund will allow access to this asset class for the price of a share, but will not offer any tax benefits.
Kelly argues that including timber within a diversified portfolio can help lower risk…. read more here