Dutch asset manager Robeco plans to raise $500 million for a fund investing in timber and forestry ventures, chasing opportunities as the timber market braces for expected supply shortfalls amid rising demand.
“We think this is an area that can present strong growth opportunity,” Robeco managing partner Andrew Musters told Reuters, adding that details of the fund were being finalised.
The fund, expected to be launched next year, will target private equity funds invested in forestry, as well as in companies which manage forests and timber supply.
Robeco oversees a dedicated clean technology portfolio of $800 million and eyes other investment opportunities in the sector including rare earth material recycling, water management and efficient lighting.
With a big chunk of carbon emissions coming from the destruction of trees, governments are moving to reduce deforestration, creating opportunities for forest-related ventures.
Companies with forestry specialities, such as those which apply agricultural techniques to boost density of forests or even those engaged in the trade of timber, are among those to benefit.
“Natural resources will be bone scarce…(the) goal is to be more efficient with resources. So for more investors, it’s an attractive investment theme,” said Musters.
Musters said he likes opportunities in the energy efficiency space as well as recycling, and is eyeing the United States and China among markets for rare earth material recycling ventures.
“The recycling part (of rare earth) is definitely of interest to us,” he said.
Rare earth, used in wind turbines, batteries and high-tech devices, is mostly sourced from China. China’s decision to curtail its exports opened opportunities for businesses that recycle elements and ensure rare earth’s efficient use.
Robeco also recently launched a $500 million clean tech private equity fund and expects to complete its fundraising by the second quarter of next year.
A third of the clean tech fund will be invested in Asia, particularly in China, India and Japan.
“Within private equity, clean tech is going to be one of the more attractive areas…which is why our fundraising process is going well at the moment.”