By Raquel Mustillo
ONE of the world’s largest asset managers has purchased more than 22,000ha of pine plantation in the Green Triangle in what is the biggest forestry deal in the region in more than a decade.
Investment company AXA Investment Managers has acquired the Green Triangle Forest Products softwood business, which owns plantations across South Australia and Victoria and provides log to sawmills that supply the residential construction market.
The portfolio, previously owned by funds advised by Global Forest Partners LP, is one of four major softwood plantation estates in the region and comprises of a mixed-age portfolio of pine.
AXA Investment Managers Alts head of Australia Kumar Kalyanakumar said the acquisition of the estate was the company’s first forestry investment in Australia.
Mr Kalyanakumar said it would be “business as usual” within the company, with AXA Investment Managers buying the land, trees and the brand, in addition to the management team.
“All we are going to do is just replace Green Triangle Forest Products – which is owned by a US-based policy investor – and come in as a new owner, but as far as the market is concerned, nothing changes,” he said.
“We are pleased to have the strong senior management team, currently led by Laurie Hein, continue to manage Green Triangle Forest Products on behalf of AXA Investment Managers.
“We have long standing relationships with customers and contractors who depend on us.”
While the Australian Financial Review had pegged the deal as approximately $770m, Mr Kalyanakumar declined to confirm on the value of transaction.
Mr Kalyanakumar said there was competition, but the company was determined to secure the estate and add to its existing portfolio of 60,000ha of European forestry holdings.
“We like forestry because it brings certain environmental credentials, especially around carbon sequestrations,” he said.
“The Australian forestry is a bit different to the European forestry as here a tree can grow, mature and be ready for harvest in roughly around 30 years, in European markets you will sometimes wait for 80 years to cut down a tree.
“Green Triangle Forestry Products will play a greater role in transforming Australia into a low carbon economy.
“We are a long-term investor and we are naturally concerned about climate change and therefore adding forestry assets to our existing portfolio of roads, ports, buildings in the CBD and shopping malls deals with all of the environmental concerns we have.”
The estate is currently managed by management team comprising of 16 people based in Mount Gambier and its business activity is further supported by approximately 100 contractors from across the region.
Green Triangle Forest Products managing director Laurie Hein said the sale would have no affect on the company’s supply arrangements with domestic customers and long-standing outsourcing relationships with contractors.
“People understand that our company has had a presence in the region for over 70 years and we will get some comfort that we really don’t expect things to change from a shopfront perspective,” he said.
“We have very solid relationships with customers and contractors and I’m sure we will be firmly embrace by our key stakeholders.
“We have a very responsible direct investor here that we look forward to working with and that will be good for every person in Mount Gambier and the Green Triangle.”
The acquisition has been touted as the biggest forestry deal in since the sale of the South East future harvesting rights in 2012.
OneFortyOne purchased the 61,000ha asset from the State Government for approximately $667m.