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NPS commits $150m to global timberland in push for diversification

A dense forest of tall, straight, moss-covered pines (123rf)
A dense forest of tall, straight, moss-covered pines (123rf)
The National Pension Service said Friday it has committed $150 million to global timberland investment for the first time, in its push for portfolio diversification.

The investment by the world’s third-largest pension fund, overseeing 807.3 trillion won ($729 billion) in assets as of November, will go to Stafford International Timberland IX, a ninth flagship timberland fund managed by London-based Stafford Capital Partners.

Through the partnership, the NPS will be able to get exposure to a diverse global timberland portfolio acquired primarily in the United States and Australia through a secondaries investment strategy, co-investments and primaries.

The NPS’ allocation will be part of the fund‘s $750 million of commitments with the scheduled final close in April this year. Stafford has managed $2.7 billion worth of timberland assets.

The pension service said the portfolio diversification bodes well for its pursuit of safe and stable return in part by increasing its alternative exposure. NPS was managing 65.2 trillion won foreign alternative assets in November, taking up three-quarters of the total deployment to alternative assets. The NPS has pledged to increase its alternative exposure to 15 percent by 2024, from its current 11 percent.

“We recognize commercial and environmental benefits of timberland investments in the shift of living environment based on our study of this particular sector for past several years” said Ahn Hyo-joon, chief investment officer of the NPS.

“NPS commitment to timberland is well aligned with our strategy to enhance sustainability of our global portfolio. It will also help to diversify alternative investment assets with risk-adjusted return.”

Stafford said investments in mature timberland assets provide consistent annual yields from timber harvesting and capital growth through log price appreciation, land appreciation and increases in standing volumes.

“NPS investment into SIT IX comes at an opportune time as we continue to see growing consumer demand for sustainable products,” said Stephen Addicott, managing partner of timberland at Stafford.

Stafford was founded in 2000, and has since managed $7.7 billion in real assets and provided investment advisory services for more than 140 institutional clients across the world.

By Son Ji-hyoung (consnow@heraldcorp.com)
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