SLM Partners has announced the first close of the SLM Silva Fund, a sustainable Irish forestry fund backed by the European Investment Bank and other investors

APRIL 26, 2018. SLM Partners announced the first close of the SLM Silva Fund, a new investment fund that will acquire and manage commercial forest properties in Ireland. The fund has attracted investment from several large European institutional investors, an Irish endowment fund, and a family office, and it is open to additional investors for a further 12-month period. A key differentiating factor of the Fund is that it will seek to replace clearfelling with an alternative, sustainable form of forest management known as Continuous Cover Forestry (CCF) or ‘close to nature’ forestry.

‘We are delighted to announce the first close of the SLM Silva Fund,’ said Darius Sarshar, Investment Director. ‘Ireland is one of the best places in the world to invest in timberland. Commercial conifer forests here are amongst the most productive in the world, due to the mild, wet climate and long growing season. The country also has a world-class wood products industry supplying both the domestic and UK construction markets, and there is rising demand for wood energy. Due to the fragmented nature of the resource, asset prices are reasonable, unlike in many developed markets where assets are overbought and prices are in bubble territory.’

One of the investors in the fund is the European Investment Bank (EIB), which has invested via its Natural Capital Financing Facility (NCFF), a joint initiative of the EIB and the European Commission funded by the EU LIFE financing instrument. In addition to the fund investment, the NCFF will also  provide a substantial technical assistance grant to support training of Irish foresters and harvesting contractors in CCF, and to conduct further research into the positive impacts of CCF management on biodiversity, timber yield and carbon sequestration.

Under CCF, age and species diversity is promoted across regular thinning cycles, so that forest cover is maintained permanently, with trees being felled individually or in small groups every few years, making way for natural regeneration of future trees. CCF generates a stronger recurring cash yield from timber sales, while the resulting stands are more resilient to windthrow, pests and diseases. The forests have higher biodiversity and amenity values, and the absence of clearfell events avoids the negative impacts on soil and water resources that can be caused by conventional management.

The forestry assets of the fund will be managed by local forestry company Purser Tarleton Russell (PTR). PTR is a leading Irish forestry management, consultancy and research firm established in 1996 and currently manages over 2,000 ha of private forest land across Ireland according to the CCF approach.

‘CCF is a management system ideally suited to institutional investors. It offers a stronger earlier cash yield than conventional management based on clearfelling, whilst at the same time it reduces biophysical risks, and has strong positive environmental and social impacts. Our investors are keen to support conservation-orientated forest management, and to see an increase in the flow of sustainably produced wood into Irish and international markets from undermanaged farm forests across the country. The fund will enable this to happen in a way that is in the best interests of local communities and the environment’ said Paul McMahon, Managing Partner.  

SLM Partners is an asset management firm that specialises in agriculture and forestry strategies that deliver superior risk-adjusted returns and positive environmental impacts. Founded in 2009, it manages an Australian beef cattle fund that is applying holistic planned grazing across 480,000 hectares of land, and is developing farmland investment opportunities for institutional investors and family offices in the USA.