Since the start of the Silvestica Green Forest in the summer of 2017, the business has developed faster than planned and at the end of last year the total investments amounted to approximately EURO 160 million distributed over 54,000 hectares. As a result of the fast investment rate, an increased commitment from the investors became necessary. The response from all of them was very positive and just before the turn of the year 2019/2020 we were pleased to note that the fund has been fully subscribed and closed in accordance with the objective, ie. a total commitment of EURO 500 million distributed among our investors:
– Old Life Insurance Company, SEB Trygg Liv
– The Folksam Group
– KLP (Kommunal Landspensjonskasse Gjensidige Insurance Company)
– FPK (Insurance Branch Pension Fund)
The years 2018-19 have been an exciting time for the Nordic forest sector in general. Several major investments have been completed. Here are mentioned Äänekoski – Metsä Fiber, Östrand – SCA, Värö – Södra Skogsägarna and Gruvön – Billerud Korsnäs. The high rate of investment looks to continue over the next few years. SCA has begun a major project in Obbola and Metsä has well-advanced plans for a large bio combinate in Kemi as well as a new large sawmill in Rauma, which may become the most modern in the world.
The investments in the forest industry result in a greater demand for wood raw material and in combination with a strong market situation and a general interest in wood, cellulose and various cardboard / paper products as well as sustainability / renewable in general, it gives an increased focus on forest investments.
As a result of the increasing demand, interest and thus also prices of forest properties have increased throughout Silvestica’s business area. There have been several major transactions in strong competition during 2018-19. For Sweden, the sale of Bergvik Öst, about 350,000 hectares, stands out. This transaction showed that the market (institutional investors) accepts a lower yield than before. This has in turn led SCA and Holmen to indicate significant value appreciation of their large forest holdings in connection with the 2019 financial statements. In Latvia and Estonia, Södra’s acquisition of Bergvik’s holdings, approximately 100,000 hectares, as well as SCA’s acquisition of approximately 30,000 ha in three transactions, took place at higher prices than the market levels were before 2018.
Interest in the fund has met our expectations and we are now continuing a high pace in identifying and implementing new and interesting acquisitions. Thanks to an efficient organization, our partners and well-developed networks around the Baltic Sea, we expect to approach the Fund’s target of EURO 500 million in total invested capital over the coming years. Roughly speaking, this means about 140,000 hectares of forest land distributed in the five countries around the Baltic Sea; Sweden, Finland, Estonia, Latvia and Lithuania, to compare with the 54,000 hectares we already own.