Worcestershire County Council Pension Scheme has committed to a forestry carbon credits strategy launched by Gresham House.
The alternative asset manager has secured £73m (€86m) in commitments for a second close for Forest Growth & Sustainability LP, taking total commitments to £200m. Scottish National Investment Bank provided the cornerstone investment for the strategy, which raised £127m in a first close announced in August.
Worcestershire told IPE that it is investing £50m in the fund as part of its property allocation. Private investors joined the £3bn English public pension fund in committing to the fund, according to Gresham House.
Elizabeth Eyre, chair of the Worcestershire County Council Pension Fund Committee, said: “Our latest investment in the Gresham House Forest Growth and Sustainability fund will further support our robust approach to diversification across our portfolio and particularly in our private assets.
“In light of strong global timber demand, we recognise the compelling investment case for forestry, as well as the emissions benefits it provides through the distribution of carbon credits.”
The Gresham House Forest Growth & Sustainability LP generates returns through the sale of timber and the capital growth of land and trees, while also producing carbon credits by creating new productive woodland.
Investors in the strategy receive distributions in the form of verified carbon credits that can be retained to address carbon emissions in their portfolio or sphere of influence, or sold to generate income.
Olly Hughes, managing director, forestry at Gresham House Asset Management, said the acquisitions team was making excellent progress with deployment and a third and final close was expected to take place in the second quarter of 2022.
As at 31 March 2021, Worcestershire County Council Pension Fund had a 15.3% actively managed alternative assets allocation, split between property (4.7%) and infrastructure (10.6%). It is working on increasing the allocation to the alternatives portfolio to 20%. The local government pension scheme also has an infrastructure investment with Gresham House.
Gresham House is the UK’s largest commercial forestry manager and manages roughly 136,000 hectares of forestry worth over £1.9bn. The business also manages two international forestry mandates.
The article was updated with the size of Worcestershire’s commitment following a response from the pension fund.
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