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24,000 hectares of pine in Green Triangle sold to AXA IM

Investment house AXA IM has taken control of 24,000 hectares of pine plantations straddling the border between Victoria and South Australia in a $775 million deal with US fund manager Global Forest Partners, the biggest timber transaction in the country for more than a decade. Source: Australian Financial Review

The acquisition is the first investment in Australian forestry for AXA IM, which manages almost 60,000 hectares of plantations across France, Ireland and Finland. The deal illustrates AXA’s appetite for sustainability-themed investments as institutional investors worldwide align their portfolios to climate change issues.

“Investing in alternate real estate has been a focus of ours for some time now,” said Kumar Kalyanakumar, who heads the Australian arm of AXA IM Alts, its alternative investments arm.

“Investing in forestry assets is a key ingredient of this strategy. We like the Australian forestry sector’s structural attractiveness of steadily growing demand and static supply.

“As an investment manager, we are also attracted to the benefit that forestry investments can offer in our pursuit of decarbonisation of our clients’ portfolios.”

The estate that is now under AXA’s hand is one of the largest in the country’s prized forestry region, the so-called Green Triangle across south-east South Australia and south-west Victoria. It includes more than 22,000 hectares of managed land with a mixed-age portfolio of radiata pine forests, one of the big sources of saw-log supply.

The mixed-age plantations are one of the key attractions of the Green Triangle Forest Products estate. That age range allows for continuous harvesting and replanting as well as supply of saw-logs to the market, ultimately providing a steadier cash flow.

The estate was put on the market, along with an associated forestry management business, by Global Forest Partners last year. Minter Ellison advised the vendor, along with Resolute Advisory led by Michail Lagogiannis. Gresham House Asset Management in London and King & Wood Mallesons and Greenwoods & Herbert Smith Freehills supported AXA IM Alts on the deal.

The Green Triangle region is the focus of the country’s timber industry. It encompasses about 350,000 hectares of forestry land, including more than half devoted to softwood plantations. Along with the Green Triangle Forest Products estate, the region is dominated by the Future Fund-backed OneFortyOne Plantations and New Forests, an Australian-headquartered global player.

It was those two larger players that AXA IM has edged out to win the auction for the estate. Other well-established players including Hancock Timber Resource Group and Stafford would also have been interested in the asset.

The transaction is the biggest in the timber industry since the South Australian government sold its harvesting rights to state-owned plantations for $670 million in 2012 to OneFortyOne Plantations.

The forestry estate has been pitched as the jewel in the “green triangle” crown