Dasos Timberland Funds              Value Creation Through              Active Timberland Management              November...
Table of Contents   Dasos’ Message   Timberland for Private Equity   Value Creation in Individual Assets   Portfolio D...
Dasos Capital – Leading Timberland Investment Advisor   Established in 2005 as an independent company                    ...
Dasos’ Message          TIMBERLAND          + BEST FORESTRY PRACTISES          + ACTIVE OWNERSHIP          ---------------...
Table of Contents   Dasos‟ Message   Timberland for Private Equity   Value Creation in Individual Assets   Portfolio D...
Investment Approach: The Case for PE Timberland     Under-managed and sub-efficiently maintained                 companies...
Investment Approach: Asset Efficiency vs Market Efficiency                                                                ...
Investment Approach: Efficiency vs Discount Rate   Discount Rate                      Mozambique                          ...
Table of Contents   Dasos‟ Message   Timberland for Private Equity   Value Creation in Individual Assets   Portfolio D...
Different Forests Require Different Value Creation Measures...   Biological volume growth contributes 20%-30% of the retu...
... But Sustainability Concept is the Same in All Forests                                                   ECOLOCIGAL    ...
Business Plan Sets Key Measures for Value Creation    Forest           Industrial         Strategic position              ...
Value Creation through Implementation of New Technologies  Harvesting    Forest Management          Improved Genetics,    ...
Value Creation CaseAssetValue      Capital     Structuring   Road building   Harvesting        FSC pre-            Custom ...
Table of Contents   Dasos‟ Message   Timberland for Private Equity   Value Creation in Individual Assets   Portfolio D...
Diversification in Timberland Investments   Diversified timberland portfolio        –   Geography                        ...
Diversified Portfolio Brings Cash Flow and Capital Gains   1     2     3    4     5    6     7    8     9    10Brownfield ...
Thank You!                For further information please contact:                Petteri Seppänen                Dasos Cap...
Important InformationDasos SA and Dasos Capital Oy have based this document on information obtained from sources it believ...
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Value Creation Through Active Timberland Management - Petteri Seppanen

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TBLI CONFERENCE™ EUROPE 2012 - Zurich - Switzerland

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Transcript of "Value Creation Through Active Timberland Management - Petteri Seppanen"

  1. 1. Dasos Timberland Funds Value Creation Through Active Timberland Management November 2012 For further information please contact: Petteri Seppänen Dasos Capital Oy Tel: +358 40 7282819 E-mail: petteri.seppanen@dasos.fiThis document has been drafted by Dasos Capital Oy (“Dasos”) for the use of Dasos SA, Luxembourg. This document is for information and convenient reference,and does not constitute an offer or solicitation for, or advice that you should enter into, the purchase or sale of any security or other investment product orinvestment agreement, or any other contract agreement or structure whatsoever. Please refer to the appendices for further important information
  2. 2. Table of Contents Dasos’ Message Timberland for Private Equity Value Creation in Individual Assets Portfolio Diversification Sustainable Timberland Investment. 2
  3. 3. Dasos Capital – Leading Timberland Investment Advisor Established in 2005 as an independent company European (Nordic) Forest whose majority is owned by the Management Cluster with Global Presence Team Industry Forestry technology Dasos Headquarters in Espoo, Finland with close proximity to a number of top 10 forest industry companies and unique Nordic forest cluster (turnover EUR 50+ bn) Dasos Singapore office located in the middle of the fastest growing forest product markets at R&D, Education the heart of the expansion of European forest industries as well as significant investor and cooperation partner potential Energy First Nordic timberland fund manager with Timberland European focus Investment Consulting Engineering Sustainable Timberland Investment. 3
  4. 4. Dasos’ Message TIMBERLAND + BEST FORESTRY PRACTISES + ACTIVE OWNERSHIP ------------------------------------------------- = PROFITABLE & SUSTAINABLE Sustainable Timberland Investment. 4
  5. 5. Table of Contents Dasos‟ Message Timberland for Private Equity Value Creation in Individual Assets Portfolio Diversification Sustainable Timberland Investment. 5
  6. 6. Investment Approach: The Case for PE Timberland Under-managed and sub-efficiently maintained companies/assets OR/AND Assets/companies in inefficient market (new market, developing market, emerging market etc) Sustainable Timberland Investment. 6
  7. 7. Investment Approach: Asset Efficiency vs Market Efficiency ”Best practices High Nordic forestry” Tanzania ”Typical” Uruguay ProjectAsset Efficiency(=mgmt etc) Romania Laos Malaysia Low Mozambique Inefficient Efficient Market Efficiency Sustainable Timberland Investment. 7
  8. 8. Investment Approach: Efficiency vs Discount Rate Discount Rate Mozambique Uruguay Sweden ”Timberland universal asset specific discount rate” Efficiency (Information) Sustainable Timberland Investment. 8
  9. 9. Table of Contents Dasos‟ Message Timberland for Private Equity Value Creation in Individual Assets Portfolio Diversification Sustainable Timberland Investment. 9
  10. 10. Different Forests Require Different Value Creation Measures... Biological volume growth contributes 20%-30% of the return 3-15% return on capital Finnish Pine Spanish Eucalyptus Tropical Teak Tropical Eucalyptus ~5 m3/ha/a 12-18 m3/ha/a 12-18 m3/ha/a 35-50 m3/ha/a 80-100 yrs 10-15 yrs 20-25 yrs 7 yrs Sustainable Timberland Investment. 10
  11. 11. ... But Sustainability Concept is the Same in All Forests ECOLOCIGAL (nature values, biodiversity) SOCIAL ECONOMIC(employment, stakeholders, (sustainable beneficiaries) revenue, rational forest economics) All investments by Dasos are made in accordance with: • The Fund’s own comprehensive Forest Investment Policy • Local conditions and legislation • EU environmental policies and Equator Principles • EU’s Directive on Environmental Impact Assessment Dasos only invests in forests, which are certified or certifiable. Sustainable Timberland Investment. 11
  12. 12. Business Plan Sets Key Measures for Value Creation Forest Industrial Strategic position Capital management & business & development Governance structure & silviculture development valuesLong term forest Long term wood management Certification Dividend policy Board work sales agreements agreements Improved Co-operation and Infrastructure Optimal capital silviculture partnering with Incentives improvement structure practices Nordic companies M&A Business platform (buy and build) development Realization of development values (HBU) Sustainable Timberland Investment. 12
  13. 13. Value Creation through Implementation of New Technologies Harvesting Forest Management Improved Genetics, Health and Safety Marketing & Technologies Planning Tree Breeding Monitoring Geographic Planning Systems Fertilizing Forest inventory Satellite Positioning Sustainable Timberland Investment. 13
  14. 14. Value Creation CaseAssetValue Capital Structuring Road building Harvesting FSC pre- Custom er Value growth Total value appreciation revenues assessment relationship (thinnings) added (biological building growth) Value Creation Actions Sustainable Timberland Investment. 14
  15. 15. Table of Contents Dasos‟ Message Timberland for Private Equity Value Creation in Individual Assets Portfolio Diversification Sustainable Timberland Investment. 15
  16. 16. Diversification in Timberland Investments Diversified timberland portfolio – Geography Geography – Age/Maturity of asset Maturity – Tree species Species Europe vs Emerging markets: Characteristic Mature markets Emerging markets Type of asset Natural forest Plantation Maturity/cashflow Mature Mature, mature + expansion or Predictable cashflow greenfield Risk Low High -Wood price -Operative results + costs, yield -Exit value -Markets/wood price, exit value Return requirement 6-10% p.a. Mature 12...15% p.a. Greenfield 15...20+% p.a. Value creation opportunities Limited Many Sustainable Timberland Investment. 16
  17. 17. Diversified Portfolio Brings Cash Flow and Capital Gains 1 2 3 4 5 6 7 8 9 10Brownfield project - Mature timberlands bring early Simulated cash flow of combined mature,and steady cash flow greenfield and SRC investments 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10Greenfield project - Developing timberlands bringpotential for capital appreciation, and have higher IRR‟s Investment Dividend Divestment *Simulation includes three projects of each project type, sequential implementation, IRR of simulated example is 11% 1 2 3 4 5 6 7 8 9 10Short Rotation Crop (SRC) - Higher IRR potential butrevenues to investors every two-three years Sustainable Timberland Investment. 17
  18. 18. Thank You! For further information please contact: Petteri Seppänen Dasos Capital Oy Tel: +358 40 728 2819 E-mail: petteri.seppänen@dasos.fiThis document has been drafted by Dasos Capital Oy (“Dasos”) for the use of Dasos SA, Luxembourg. This document is for information and convenientreference, and does not constitute an offer or solicitation for, or advice that you should enter into, the purchase or sale of any security or other investmentproduct or investment agreement, or any other contract agreement or structure whatsoever. Please refer to the appendices for further important information
  19. 19. Important InformationDasos SA and Dasos Capital Oy have based this document on information obtained from sources it believes to be reliable but which have not beenindependently verified. All charts and graphs are from publicly available sources or proprietary data. Except in the case of fraudulentmisrepresentation, Dasos SA or its Investment Advisor Dasos Capital Oy (“Dasos”) make no representation or warranty (express or implied) of anynature or accept any responsibility or liability of any kind for the accuracy or sufficiency of any information, statement, assumption or projection in thisdocument, or for any loss or damage (whether direct, indirect, consequential or other) arising out of reliance upon this document. Statements made inthis document relating to the Dasos Timberland Fund I or Dasos Timberland Fund II (both „the Fund‟) are intended as a summary and not a completedescription and may be subject to change. Dasos is under no obligation to keep current the information contained in this document.Prospective investors are solely responsible for making their own independent appraisal of and investigations into theproducts, investments and transactions referred to in this document and should not rely on any information in this document asconstituting investment advice. This document is not intended to provide and should not be relied upon for tax, legal or accountingadvice, investment recommendations or other evaluation of the Fund. Prospective investors should consult their tax, legal, accountingor other advisors. The levels and bases of taxation can change. Prospective investors should not rely upon this document in making anyinvestment decision. The final version of the Limited Partnership Deed will contain material information not in this document.Investment in the Fund involves particular risks - prospective investors should read and understand the explanations of risk in the finalversion of the Fund’s Private Placement Memorandum before making any decision.Investments can fluctuate in value, and value and income may fall against an investor‟s interests. Changes in rates of exchange and rates of interestmay have an adverse effect on the value or income of the investment. Figures included in this document may relate to past performance. Pastperformance is not a reliable indicator of future performance. Investment in the Fund entails a high degree of risk and is suitable only for sophisticatedinvestors who fully understand and are capable of bearing the risks of such an investment, including the risk of total loss of capital. There can be noassurance that the Fund will be able to achieve its investment objectives or that investors will receive a return of their capital. There can be noassurance that the Fund will be able to achieve its investment objectives or that investors will receive a return of their capital. Limited partnershipinterests in the Fund will have an inherent lack of liquidity and will not be readily realisable; it may also be difficult to obtain reliable information aboutthe value of such an investment, or the value of the Fund, or the extent to which the Fund is exposed.The Fund may acquire or hold assets as principal or allocate such assets to another customer or an associate of Dasos SA that may otherwise havebeen acquired by the Fund. Furthermore Dasos SA may offer co-investment opportunities to limited partners, or third parties. These circumstancesrepresent conflict of interests. Dasos SA and Its Investment Advisor have internal arrangements designed to identify and to manage potentialconflicts of interest.Information in this document is confidential. Distribution of this document or information in this document, to any person other than an originalrecipient (or to such recipient‟s advisors) is prohibited. Reproduction of this document, in whole or in part, or disclosure of any of its contents, withoutprior consent of Dasos SA or an associate, is prohibited. This document should be distributed and read in its entirety. This document remains theproperty of Dasos SA and on request must be returned and any copies destroyed. This document is not intended for distribution to, or useby, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. Sustainable Timberland Investment. 19

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