Funds and investment firms are becoming ever more acquisitive of land and forests in Brazil due to the potential for growth in demand for wood between companies in the pulp and paper, furniture and steel, among others. Given the concern about a possible halt to acquisitions in forestland in the country, these companies believe that the practice of signing long term contracts, common in the northern hemisphere, may also become usual procedure in Brazilian territory.
The profile of investors is varied, from private companies such as JBS Friboi to pension and investment funds. Obviously as investors, what brings then into this area first and foremost is the potential for investment returns from forestry in the long term – the cycle of a forest of eucalyptus is 6 to 7 years. “This is a market that brings together investors with liabilities consistent with a scenario of long-term returns, such as pension funds, for example,” said the president of Victory Asset Management, Humberto Grault Vianna de Lima.
Victory Asset is a fund manager that invests in forestry in Brazil, the company was created with funds totalling $ 550 million. Currently owning 76 thousand hectares, of which 10 thousand hectares of eucalyptus plantations are in Brazilian Forestry. Victory Assets plan to own 335 thousand hectares. “Our goal is to create the largest independent reforestation of the country,” said a company sokesperson
The appeal of the forestry investment market can also be seen in the operations of the NSG Capital in Brazil. The administrator plans to launch three forestry funds by January 2010, the first with a net worth of $ 200 million. The goal of the NSG is to raise a total of $ 400 million in the three funds, which will buy 170 thousand hectares of forestry planations. After the acquisition of an agribusiness firm, the chairman of the NSG, Luiz Eduardo Abreu, said the company intends to manage forest assets to meet the demand for wood to produce cellulose and charcoal. “We believe the demand for wood will be greater than the current capacity of companies already investing in forests.”
The company already has about 10 thousand hectares of eucalyptus forestry, in an area that can be harvested in about three years. “The investment funds will only work with eucalyptus, but we are also looking at opportunities in other wood” says Abreu. The forestry funds are also looking at the market for power generation using wood energy from forestry plantations.
The Asset Management of Canadian group Brookfield also manages funds with an area of 83 hectares in Brazil , of which the current usage is mainly for planting eucalyptus. Plans to triple this plantationarea are in place.
The company’s president, Silvio Teixeira points out that forestry investments can be made anywhere in the country, except the Amazon. Brookfield owns land in Sao Paulo, Parana, Minas Gerais and Mato Grosso do Sul, where there is a great demand for eucalyptus and pine.
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