MIDAS SHARE TIPS: Save the world and see your cash grow on trees with the Foresight Sustainable Forestry Company
Deforestation accounts for more than 10 per cent of global greenhouse gas emissions, according to scientists.
Forests absorb about a third of all the carbon dioxide generated from burning oil, gas and coal so it was a pivotal moment when world leaders, gathered in Glasgow for climate change conference COP26, agreed last week to end deforestation by 2030. The UK hopes to go further, with a plan to plant trees across 75,000 acres a year, equivalent to covering Birmingham with forests on an annual basis.
Foresight Sustainable Forestry Company aims to play a major role in this and provide investors with annual returns of at least 5 per cent above inflation along the way.
Planting for the future: Foresight Sustainable Forestry Company’s portfolio will absorb carbon dioxide
The group is set to float on the main market of the London Stock Exchange later this month, raising between £130million and £200million at £1 a share. The shares will be available through intermediaries such as AJ Bell, Redmayne Bentley and Hargreaves Lansdown, and investors can apply for shares until November 18.
Foresight managers Robert Guest and Richard Kelly have already amassed a seed portfolio of 27,000 acres, valued at £140million.
Around 70 per cent of this land is currently forested, while the rest will be converted into woodland over the coming years.
Guest and Kelly are passionate about trees but they are commercially astute too. Demand for timber is growing, as wood is far more environmentally friendly as a building material than products such as steel and cement.
Yet supplies are limited, particularly in the UK, where just 13 per cent of the country is forested, compared to more than 45 per cent in Continental Europe.
Over the past 20 years therefore, UK timber prices have grown at almost 6 per cent a year, a trend that is expected to continue.
Foresight Sustainable Forestry Company intends to generate revenues from the start by selling timber. At the same time, however, the firm hopes to win environmental plaudits and deliver long-term growth by planting new trees.
A new 250-acre project starts this month in Carmarthenshire, in South West Wales, where more than 200,000 trees will be planted, around a quarter of which will be juniper, a rare and endangered species that will be left simply to grow and absorb carbon dioxide.
Guest and Kelly have identified a further 1.2 million acres of land in Scotland, Wales and Northern England that would be ideal for new forests. The duo are in active discussions with landowners and are keen to create a portfolio, half of which would be devoted to mature forests and half of which would become new woodland filled with a blend of commercial trees such as pine and fir, and ancient native species too such as whitebeam and holm oak.
Assets are acquired directly from farmers, many of whom are struggling to make ends meet and are keen to sell up. While it is sad to see farmland being sold, Foresight sees itself as a force for good, helping cash-strapped farmers and creating woodland filled with pathways, bike trails and new wildlife.
Crucially, the forests suck up carbon dioxide, with Foresight estimating that the flotation proceeds alone will result in some four million tons being absorbed from the atmosphere, equivalent to Edinburgh’s annual carbon dioxide footprint.
Commercially, too, buying pastureland makes sense. The value increases incrementally once planning permission is secured to plant trees and Foresight gains carbon credits, which can be sold to businesses so they can reach their carbon reduction goals.
Midas verdict: Speaking at COP26, Boris Johnson described trees as ‘the lungs of our planet’. Foresight Sustainable Forestry Company intends to help those lungs to breathe more easily and deliver annual growth of more than 5 per cent to shareholders. For investors in search of alternative, eco-friendly assets, the shares, at £1 apiece, could be just the ticket.
To be traded on: Main market Ticker: FSF Contact: fsfc.foresightgroup.eu or 020 3667 8100