UniSuper in Tasmanian forestry deal with UK, Dutch pension funds

The $120bn superannuation giant has bought one of Australia’s largest forestry plantations, in a three-way deal with pension funds in the UK and the Netherlands.

The $120 bn UniSuper has stepped up its involvement in the timber industry, buying a one third interest in the plantations once owned by the controversial Tasmanian woodchip company, Gunns.

UniSuper, which is buying one third interest in the 170,000 hectare plantation forestry estate in Tasmania as well as Tasmanian forest management company Forico, is pitching the deal as “helping to support the global transition towards decarbonisation as well as substitution to sustainable timber material.”

The plantation estate was once owned by Gunns, once Australia’s largest exporter of woodchips, which went into administration in 2012 following heavy financial losses and a long battle with environmentalists in the state including former Greens leader, Bob Brown.

UniSuper is buying the assets in a three way deal with UK Pension Protection Fund (PFF) and Dutch based APG Asset Management (APG).

The deal will see UniSuper, one of Australia’s largest super funds, expand its portfolio of unlisted assets by buying Tasmania’s largest private forestry manager, Forico, and the hardwood forestry estate, the largest in Tasmania.

They are buying the assets from New Forests, a global investment manager, with some $11 bn in assets under management, specialising in nature based real estate and natural capital strategies.

The company will be retained to provide investment management services to the business.

Investors said New Forests had been working with Forico over the past decade to “help transform the assets into one of Australia’s leading sustainable timber producers.”

Sandra Lee, head of Private Markets at UniSuper, said the deal would add “further momentum” to the fund’s growing private markets and forestry portfolios.

“We’re delighted to be investing in an asset of this scale and quality,” she said.

“Not only is forestry a portfolio diversifier, but it also supports the global transition towards decarbonisation through carbon storage, as well as substitution to sustainable timber material.”

“We look forward to working closely with New Forests and our co-investors as we further develop this asset.”

UniSuper’s interest in the Tasmanian forestry business dates back to 2010 when it bought a five per cent stake in Gunns, increasing it to 7.99 per cent the following year.

In its prime, Gunns employed some 1,200 people and was the biggest hardwood sawmiller in the southern hemisphere.

The company scrapped plans to build a pulp mill in Tasmania after opposition from environmentalists.

The UniSuper deal includes the purchase of 90,000 acres of productive plantation forest as well as two wood processing mills, a seedling nursery, a fibre technology laboratory and port access at Long Reach, Tasmania.

The investors are describing the new look timber business, which has been managed by New Forests, as a “key contributor to the supply of sustainable hardwood both domestically and overseas”, with uses including packaging and tissues.

Mark Rogers, chief executive officer of New Forests and chair of Forico, said New Forests and Forico had a long history of managing the estate.

“We are delighted to bring together like-minded, long-term partners to support the future of forestry in Australia,” he said.

“We’ll be looking at ways to add further value, harnessing the growth of the circular bioeconomy, carbon projects, natural capital and bio diversity markets.”

UniSuper said Forico had taken a market leading approach to valuing natural capital and sustainability reporting, demonstrating that the estate had sequestered more than 123 million in carbon dioxide emissions.

It says the current rotation is expected to sequester a further 24.7 million tonnes of CO2 before it is harvested and replanted for another rotation.

The deal will expand UniSuper’s $15 bn private markets portfolio which has targetted unlisted assets including forests, digital infrastructure, and airports.

UniSuper’s timber assets include one in Victoria and two in New Zealand.

The investors did not disclose the cost of the deal.