Gresham House, a specialist alternative asset manager, has secured $500 million for its largest-ever forestry fund, Forest Fund VI, marking a significant milestone in the UK’s forestry investment sector. The fund has attracted institutional backing from several British local government pension schemes, as well as international investors, including one from Japan.
The latest fundraise reflects growing investor interest in forestry as a means of achieving uncorrelated financial returns alongside measurable environmental outcomes. The fund aims to deliver an annual return of approximately 8% by investing in both newly planted and existing forests across the UK.
Olly Hughes, Managing Director of Gresham House’s forestry division, said the fund represents the firm’s largest capital raise for a single strategy to date and signals increasing momentum in the sector. “It’s the largest fundraise in a single fund that we’ve raised and a signal of the interest and the momentum that’s building around the sector as a whole,” he said.
Forestry has gained traction among asset owners for its role in sustainable investment, particularly as investors seek exposure to sectors less correlated with public markets. The strategy also supports environmental targets, including carbon sequestration and biodiversity enhancement.
Investors in Forest Fund VI include London CIV, which manages assets for various London borough pension funds, and the Wales Pension Partnership. The fundraise follows the recent Mansion House Accord, which indicated growing support among UK pension providers to increase allocations to private markets.
According to Hughes, the capital raised will help UK and international institutional investors access forestry investment at scale for the first time. It will also support national sustainability goals, particularly in a country that currently imports around 80% of its timber and wood fibre.
The fund is expected to sequester 4.7 million tonnes of carbon dioxide over the next 25 years and could potentially generate carbon credits, offering an additional revenue stream for investors.
“Forestry offers the compelling combination of uncorrelated financial returns and measurable environmental benefits – from boosting biodiversity to contributing meaningfully to carbon sequestration,” said Elwyn Williams, Chair of the Joint Governance Committee for the Wales Pension Partnership.
The capital will be deployed to support rural economic development and supply timber for construction and other industries in an environmentally responsible manner.
