The London company that has struck a forestry agreement with Coillte was prepared for a heightened reaction to the deal from farmers and rural politicians because “sensitivities” often arise when big institutions from abroad invest in land, its chief executive has said.
Tony Dalwood, who took the reins at stock market-listed Gresham House eight years ago, said the fund’s deal with the semi-State forestry firm will be “good for Ireland” by helping to hit climate targets and creating jobs. He added that the move will not drive up the price of farmland as some critics have argued.
The deal with Coillte has stirred significant political controversy in recent days with farmers, environmental groups and some politicians raising concerns about the potential ramifications of a large British fund buying up Irish land.
Capital-funding deal
The Social Democrats and Sinn Féin have described the deal as a “land grab” in rural Ireland. But Gresham said its arrangement with Coillte is just a normal institutional capital-funding deal which has already been completed.
As part of the agreement with Coillte, Gresham has set up an Irish-registered entity, the Irish Strategic Forestry Fund (ISFF), that aims to raise €200 million from various institutions such as pension funds and “family offices”, which handle deals for wealthy private investors.
It has raised €35 million so far, the majority of which comes from Irish investors, including an Irish taxpayer-backed fund that has put in €25 million.
ISFF will use the cash to buy about 8,500 hectares of existing forestry from Irish farmers and other private landowners. It will also buy a further 3,500 hectares of “peripheral land”, which it says will not be “prime farming land”. It will replant this land with trees, which it says will help to increase tree cover and capture carbon from the atmosphere.
Coillte’s involvement comes in the form of a contract to manage ISFF’s forests on the ground by planting, maintaining and eventually harvesting them. Gresham will not own the forests but will act instead as the investment manager, raising the cash from pension funds and family offices and taking a fee for managing their investment.
The land and forests will be owned by the Irish-registered ISFF, in partnership with the Irish and foreign investors who put up the cash to buy in. Their financial return will come later from cash that is generated when the trees are eventually chopped down and sold to be processed in the State’s €3 billion timber industry.
Speaking in Britain on Friday, Mr Dalwood said Gresham specialises in raising cash from investors to buy assets that have a sustainable theme. It organises deals in areas such as battery power storage and converting waste into energy. He described the firm as “one of the largest players in the world” in forestry. He said it decided to invest in Ireland following Brexit, to keep access to the European investment market. It set up an operation here after buying two local firms.
Mr Dalwood, who said he has family links to west Cork, added that he knew its deal with Coillte could stir controversy and Gresham had experienced similar reactions with previous deals in Scotland.
“It hasn’t surprised me. My mother is Irish and my family has land [in Ireland]. I understand the sensitivities,” he said. “But I hope the benefits of what we are doing will also be recognised. The environmental benefits are clear. Independent analysis also shows the deal will create 200 rural jobs directly managing the forests, and indirectly harvesting and processing the timber. It’s worth pointing out that the majority of our investors so far are Irish,” he added.
3,500 hectares
Some of the environmental criticisms of the deal channel fears that the arrangement with Gresham will just mean planting more non-native conifers on the 3,500 hectares ISFF will own.
Joe O’Carroll, Gresham’s investment director in Ireland, said the forests will be 65 per cent conifers, 20 per cent native Irish broadleaf and 15 per cent will be left unplanted and rewilded instead.
“There will be no privatisation of State land. All land we acquire will come from private owners,” said Mr O’Carroll.
Mr Dalwood said the fears that Gresham will drive up the price of land for farmers are unfounded. He said it is not targeting “prime” farming land and it is “not forcing anyone to sell… we will pay the market price for land”.
He says the plan is to grow the business in Ireland with more deals in the future. “While the climate returns of planting more forests are currently unquantifiable, we hope that they will still be recognised in all of this.”
On Friday, Sinn Féin spokesman on Agriculture Matt Carthy said his party would bring forward a motion to the Dáil next week demanding the Government immediately halt Coillte’s proposed joint venture with Gresham House.
Mr Carthy said: “The venture is not about climate, it’s not even about tree-planting. For Gresham House, this venture is simply about corporate profit.
“The funds delivered through the venture will be solely for the purpose of purchasing agricultural land that farmers could plant on themselves if Government delivered a workable regulatory framework.”
