Commercial, Finance, Sourcing Renewables  -  February 29, 2024

MEAG Forestry Equity Fund Raises $200 Million

Munich Re Group's asset manager MEAG announced the first closing of its MEAG Sustainable Forestry Equity Fund with capital commitments of $207 million.

Capital for the fund came from German insurers and the pension scheme of a DAX-listed company group. 

The first investments are scheduled for the first half of 2024 and will focus on forested land in the U.S., New Zealand and Australia. Diversification will include a variety of woods and usage types covered.

The fund discloses in accordance with Article 9 of the EU Disclosure Regulation (SFDR) and has a sustainable investment strategy. It invests in ecologically sustainable forest management within the meaning of the EU Taxonomy, while at the same time contributing to several sustainability goals of the United Nations (SDGs). 

Five percent of the MEAG Sustainable Forestry Equity Fund's asset volume will be invested in new afforestation with a target volume of $500 million to $700 million.

"MEAG has decades of experience with forestry investments around the globe and these have proven to be an important stability factor in our portfolio,” said Thomas Bayerl, MEAG Managing Director and Global Head of Illiquid Assets, in a statement. “In view of the challenging conditions on capital markets right now, we are even happier about the success of the fund's first closing with more than 200 million US dollars."

One feature of forest investments is their low correlation with other investment classes. This is partly because trees grow irrespective of what is happening on capital markets. On top of this comes the long-term potential for value growth due to the globally rising demand for wood, fueled in particular by the trend toward sustainable construction and materials.