Oliver Hanke

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Measuring the impact of investments remains a main challenge for sustainable finance professionals and, together with Climate Change, an overarching theme at TBLI. Sixteen related workshops offer debate on ESG and Impact Investing trends, private equity, portfolio strategy, food production, emerging markets, sustainable energy or philanthropy investing.

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Oliver Hanke

  1. 1. Investment horizons in Impact Investing The need for long-term capital for sustainable business Oliver Hanke CEO Forest Finance Ltd
  2. 2. ForestFinance Group • A specialised sustainable forestry investment provider with headquarters in Bonn, Germany who offers more than 18 years of project development and investment expertise in forestry. • Focus on sustainably-managed tropical mixed forest and agroforestry systems that offer similar rates of return and reduced operational risks compared to conventional timber investments. • Developed over time into the largest provider of sustainable forestry direct investments in Europe with more than 12 000 investors. ForestFinance now operates € 60 million worth of forestry investments, employing more than 150 people worldwide and a further 540 subcontractors. • Regional focus on Latin America and Vietnam and involvement in many other projects worldwide. • Advisor to the Green Growth Action Alliance’s new Global Sustainable AgroForestry Fund. 2
  3. 3. Some other sustainable providers • NewForests (Australia) • Salm Boscor (Germany) • Althelia Ecosphere (UK) • The Moringa Partnership (France) • EcoTrust Forest Management (USA) 3
  4. 4. What is an investment horizon? • The total length of time that an investor expects to hold a security or portfolio. also • The point in time when you hope to achieve a particular investment goal. ⇒ Used to determine the investor’s income needs and desired risk exposure ⇒ A highly subjective variable that changes over time and is strongly influenced by living circumstances and goals. 4
  5. 5. What is the typical investment horizon of an impact investment? • Impact investments naturally try to build for (a better) future. • That means taking a forward looking, patient and disciplined approach that goes beyond economic cycles and short-term trends. • The actual investment horizon of an impact investment can vary substantially • Anything up to 20 or more years is possible (infrastructure, reforestation, etc.) • … but it will most likely not be less than 3 years. 5
  6. 6. Who can afford to wait that long? • Pension Funds • Foundations • Individuals with substantial disposable income and long-term objectives 6
  7. 7. When will they do it? • A compelling story that does not rely on business cycles • All risks are well understood • Opportunity to achieve a high return premium for taking illiquidity risks • All stakeholders are aligned and supportive • and … when exit opportunities exist! • IPO • Sale • Repurchase 7
  8. 8. So what about Agro-/Forestry? • ForestFinance offers investment opportunities in sustainably-managed afforestation or reforestation projects as well as agroforestry projects such as certified cocoa production.   8
  9. 9. Forestry/timberland as an investment • Offers low volatility • Net return potential of 10%+ p.a. with low correlation to financial markets • Real assets offer a natural hedge against inflation • Potential for long-term land value appreciation • Sustainable management practices also reduce operational risks and costs 9
  10. 10. Afforestation with mixed native forest 10
  11. 11. How to improve? • Portfolio construction • Diversification of investments • Mature and new projects • Multiple land use models • Diverse sources of revenue • Intelligent structuring 11
  12. 12. Afforestation with mixed native forest 12
  13. 13. Thank you Oliver Hanke CEO Forest Finance Ltd. oliver.hanke@forestfinance.com www.forestfinance.ch 13

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