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Alternative investments

NPS makes first investment in timberland via UK fund

By Feb 18, 2021 (Gmt+09:00)

(Courtesy of Stafford Capital Partners)
(Courtesy of Stafford Capital Partners)
The National Pension Service has committed $150 million to London-based Stafford Capital Partners in its first investment in timberland, land available for timber or farm production. 

“We initiated our investment in timberland after carefully studying it for a substantial period, as part of efforts to diversify our portfolio,” NPS Chief Investment Officer Ahn Hyo-Joon said in a statement on Feb. 18.

“Timberland investment not only aligns with the NPS investment philosophy of pursuing stable returns over the long term, but is also an attractive investment from a sustainable investing perspective.”

NPS is investing through Stafford International Timberland IX, the boutique investment firm’s ninth timberland fund, which had raised $532 million in its interim close in July of last year. Stafford will collect additional commitments to the fund until April of this year.

For the latest fund, Stafford will continue its strategy of acquiring secondary positions in existing timberland funds and accessing high quality timberland co-investments, according to its statement released last July.

With $7.7 billion of assets under management, Stafford has $2.6 billion invested in over 190 timberland assets around the world. It runs nine offices worldwide, including a Seoul office, with over 70 investment managers.

Timberland funds acquire land available for timber and farm production, and develop or transform them into timberland and farmland producing agricultural products. They also plant trees on mountains to convert them into forested land, contributing to reducing greenhouse gas emissions. An increase in land values could push the return even higher.

NPS managed 807 trillion won ($730 billion) in assets as of the end of November 2020, of which alternatives accounted for 8.1% at 65.2 trillion won.

South Korean pension funds, including the Public Officials Benefit Association, had expressed interest in timberland and farmland investments since 2016.

In 2017, two insurance units of South Korea’s Dongbu Group – Dongbu Insurance Co. and Dongbu Life Insurance Co. – became the country’s first institutional investors in a global timberland fund, committing 45 billion won to a timberland and farmland fund managed by Boston-based Hancock Natural Resource Group. At that time, the Dongbu units invested in the fund via a domestic vehicle that took about 10 months to receive regulatory approval to launch because it was an unfamiliar sector to the Korean authorities.

Write to Jung-hwan Hwang at jung@hankyung.com

Yeonhee Kim edited this article.

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