Sustainable Forestry Fund Baltic Green Fund, managed by I Asset Management Fund has purchased 2.5 thousand hectares of forest land in Latgale region.
Overall Baltic Green Fund The Baltic States own more than 6.5 thousand hectares of forest land – more than 5 thousand ha in Latvia and 1.5 thousand ha in Lithuania.
Baltic Green Fund represented in this transaction by law firms diligence a AAA Law. The whole negotiation process took three months to complete the deal. It is planned to further develop in Latvia and Estonia. The amount of the transaction is not disclosed due to confidentiality.
“The transaction in Latvia is an important strategic step for the fund to further develop and consolidate investments in sustainable forestry. Regarding the recent acquisition of a forest portfolio, we have selected the forest with the greatest biological growth potential. In Latvia, we already manage more than five thousand ha of forest land and We are constantly exploring new acquisition opportunities in Latvia and Estonia, ”says Dzintars Salavs.
By 2022, the fund plans to consolidate up to 9 thousand ha of forest land in the Baltics, but the long-term goal is 20 thousand ha of managed forest area. It is planned that by the end of the investment period the fund will reach 60-70 million euros.
“All forest land already acquired and to be acquired is and will be maintained and certified in accordance with the international sustainable forestry standards FSC (Forest Stewardship Council). In order to maintain this certificate, a mandatory annual audit of forestry activities must be performed,” says D. Salavs.
I Asset Management board member and Baltic Green Fund Investment Director Simonas Jurgionis adds that the fund’s strategy was developed taking into account the highest sustainability standards and environmental requirements. The essence of the fund’s strategy is growing and planting forests, as well as exploiting the potential of biological growth.
“Our strategy is a good example of how sustainable and responsible operations can also provide a stable and attractive return on investment. There is a growing number of investors who value not only a stable return on investment but also the environmental impact of investing in forestry. For most The fund’s sustainable investor strategy was a key criterion when deciding to invest in this asset class, as the forest with the highest biological potential also absorbs the most carbon dioxide during its growth, so that we can not only add value to our investors but also make a significant contribution to improving the environment. and to promote sustainable forestry in the Baltic States, “says S. Jurgionis.
“We have already gained the trust of institutional investors and raised a significant amount of capital. This allows us to achieve our strategic goals much faster than at the beginning of the fund. We invest the attracted capital by purchasing individual small plots of land (20-100 ha) and already consolidated portfolios if they are in line with the fund’s strategy and, most importantly, the expected annual return is at least 8-9% potential, “adds S. Jurgionis.
The fund plans to consolidate as large a forest portfolio as possible in all three Baltic countries within seven years and then sell it to a financial or industrial investor so that sustainable forestry can continue after the fund closes. The duration of the fund is eight years, with the possibility of extension for another two years. Baltic Green Fund has been operating since 2019.
The fund has chosen a conservative borrowing strategy to achieve its investment objective. Borrowed capital may not exceed 50% of the total value of assets under management. This approach does not require a change in the fund’s strategy, even in times of crisis. The Fund’s chosen financial partner in Lithuania and Latvia is Citadele Bank.
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