Global impact asset manager Finance in Motion has joined forces with Unique, a timber sector advisory company, to establish a new impact fund for sustainable forestry, the Arbaro Fund.

“After an intensive time of preparation, we are very excited to launch this brand-new joint venture into sustainable forestry,” said Marco Kaiser, Managing Director of Arbaro Advisors, the investment advisor of the fund. 

The private equity fund marked its initial closing at $60.2m in July 2018, with a target of $200m. 

Arbaro is supported by the European Investment Bank as anchor investor, the Finnish Fund for Industrial Cooperation as an experienced forestry investor, and private-sector investors including fair-finance Vorsorgekasse, GLS Treuhand, and Girteka Logistics.

Andrew McDowell, Vice President responsible for agriculture at the EIB, said: “Sustainable commercial forestry is crucial to protecting endangered forests, supporting employment in rural areas, and tackling climate change. We are pleased to act as cornerstone investor and provide $20m to strengthen the impact of the Arbaro Fund in Africa and Latin America, home to the most important and threatened forests on the planet.”

Markus Zeilinger, founder and CEO of fair-finance, expressed his satisfaction with the investment: “Especially in light of the climate goals set by the United Nations, timber – as a renewable, carbon-sequestering resource – is playing an increasingly significant role in combating climate change. That, along with the fact that its development is uncorrelated to any other asset class, makes an investment in Arbaro Fund an ideal addition to our portfolio.”

Joachim Rang, Head of Asset Management at GLS Treuhand, added: “We are happy to be part of the first closing of Arbaro and thus make a contribution to sustainable timber production. The partnership between Finance in Motion and Unique gives us confidence that the fund will meet its financial as well as ecological and social goals, and serve as a role model for sustainable forestry investments.”

Arbaro is a Luxembourg-based private equity fund managed by FiM Asset Management. 

The fund will invest in and actively manage a well-diversified portfolio of up to 12 sustainable forestry projects in Latin America and Sub-Saharan Africa – regions which are currently characterized by high deforestation rates and an increasing demand for wood resources. 

These areas are particularly poised to benefit from a significant increase in forest area, in addition to a boost in local rural employment. 

Arbaro also aims at solid financial returns, thanks to its target regions’ optimal biophysical growth conditions and high local timber demand. 

The fund represents a number of innovations in the impact investment sphere. 

It is the first forestry fund to focus on expanding plantation area and sustainable timber production in frontier markets in Latin America and Sub-Saharan Africa. 

It is the first to combine specialists with a proven track record in impact investing and forest management into the very core of its management team, ensuring projects that are closely aligned with the market and with honed environmental and social strategies. 

Locally rooted partners ensure a precise selection of sites and tree species. 

“Sustainable forestry has long been one of Finnfund’s key sectors because the world needs to step up its efforts to fight deforestation and climate change. We expect the Arbaro Fund to play an important role in this vital effort,” commented Finnfund CEO Jaakko Kangasniemi.