The fund, which aims to contribute to Ireland's Climate Action Plan, has already attracted €35 million from Irish investors, including a €25 million cornerstone investment from the Ireland Strategic Investment Fund, Ireland's sovereign development fund, the alternative asset manager said.

ISIF's capital will complement other Irish and international capital sourced by Gresham House to promote sustainable investments in a sector that is key to addressing the climate crisis. The new fund will also acquire existing forest assets; when fully deployed, it will represent a portfolio of approximately 12,000 hectares of new and existing forests.

Marking the latest step in Gresham House's expansion in international forestry, the fund will be managed from Gresham House's Dublin office, with Joe O'Carroll acting as investment director.

The firm has also announced a pre-close trading update for the 12-month period to 31 December 2022, showing that assets under management are up 20 per cent year-on-year; they are expected to reach at least £7.8 billion, despite the challenging macroeconomic backdrop. 

A tall tree in the forest
Speaking exclusively to WealthBriefing, Rupert Robinson, managing director of Gresham House, said that forestry is the largest part of the firm’s business, representing 45 per cent of its assets under management. “The asset class continues to attract institutional and private wealth, especially sustainable investors,” he added. Pension funds are also increasingly keen to invest in forestry. 

With £3.4 billion of client assets in the UK, Europe and Australasia, Gresham House is one of the largest global forestry asset managers by value and the largest in the UK.      

Robinson highlighted the attractive return opportunities in the Australian and New Zealand forestry markets, saying that they are continuing to explore opportunities in Australia, in terms of mature forestry and new planting. In New Zealand, they are focusing more on carbon credit. 

The firm’s sustainable international forestry fund recently made acquisitions in the UK, Ireland, New Zealand and Australia.

“The UK market for forestry estates continues to be buoyant and the supply and demand dynamics remain extremely positive,” Robinson continued. 

Housing demand is expected to continue increasing the demand for timber in the longer-term, due to a rising world population, as well as the move towards a low carbon economy.

World timber consumption is predicted to rise by almost threefold over the next 30 years, resulting in increased timber prices over the medium to long term. Consequently, Robinson remains very positive about the outlook for the domestic market. 

Vertical farming
In the firm’s sustainable infrastructure division, Robinson said that they are putting more emphasis and resources into a number of areas, including vertical farming.

“Vertical farming is one of the underlying investments in our Sustainable Infrastructure Fund,” he said. 

With population pressures and climate change becoming increasingly important, he emphasised the importance of vertical farming for producing more by using fewer resources. 

“Food production accounts for almost one quarter of greenhouse gas emissions and intensive agriculture depletes finite resources. That is why vertical farming is relevant as it uses soil-less techniques – hydroponics and aeroponics – and minimises land requirements,” he said.

The sustainable asset manager invests in Fischer Farms, which specialises in indoor vertical farming, using LED lighting to enable all-year-round fruit and vegetable production. Vertical farming uses up to 95 per cent less water than traditional farming and no pesticides.

He highlighted how four acres of vertical farms can produce the same amount of crops as a 1,000 acre field, and supermarkets are keen to buy.

“We are also completing another vertical farm in Norwich to supply 6.5 tonnes of leafy salad and other fresh products to supermarkets,” Robinson said. 

“But we haven’t really scratched the surface yet in terms of the number of vertical farms that will be needed to get real scale into this area,” he continued. 

“As a long-term investment opportunity, we see this as something whereby over time we can build many more farms which are larger and can generate their power from renewables whether solar or wind, together with batteries to store the power,” he said. 

“If we look at demand and the interest from supermarkets and what’s achievable, there’s a very exciting future ahead and we will expand in this area,” Robinson concluded. 

Gresham House has been managing commercial forestry assets on behalf of institutions, endowments, family offices and private investors for over 40 years. 

Its real assets division, comprising forestry, housing, renewables, battery energy storage and sustainable infrastructure, aims to protect investors from inflation and contribute to environmental and societal challenges, with ESG criteria integrated at all stages of the investment process. See here for a previous article on Gresham House.