June 14, 2013 Sustainable Asset Management (Investorideas.com renewable energy newswire) It has long been understood that trees are a very important part of our planet and they remain one of the few natural resources that touch all our lives on a daily basis, whether a piece of wood in the home, the floor we walk on, a book we are reading, or even the feint rustle of leaves in the air as we stroll along; we all benefit from trees. We need them, and yet we all know they are under threat.
Despite the efforts over the years of governments, politicians, business magnates and even celebrities, the growing commercial demand for timber, crop land for food and biomass, combined with other demands on forest resources & related products, mean that large natural forests remain under serious threat; some of the most treasured species are in danger of extinction.
More recently trees and timber have become a mainstream part of our everyday investments. Hedge funds and pension funds have long been investing in forestry & timber plantations along with their associated supply chains; these have even outperformed stock markets for over a century. During the last decade pioneering companies like Asia Plantation Capital have made plantations and trees more accessible to both large and smaller investors who can now buy plantations and have them managed on their behalf to reap the future returns from this amazing natural resource. In fact many analysts, the United Nations and a growing number of those same business magnates now agree on one common solution that always succeeds; "Show a man how to make money from a problem and let the money solve it".
One shining example of this is the threatened agarwood tree. Harvested in the wild to near extinction due to traditional uses now exasperated by modern trends and high global demand for fine fragrance and medicines produced from this rarest of trees and the natural oil it produces, Oud. Despite the fact it was made illegal to harvest in the wild by international convention (CITES) more than ten years ago, commercial demand today has the species as a wild natural tree teetering on extinction.
A combination of science, research, practical experimentation and a huge amount of investment has been salvation for the agarwood tree, now a shining example of an international environmentally successful and commercial project which has the ability to; safeguard and protect the species; supply global demand in a sustainable way whilst generating revenue; guarantees the future of a rare species whilst benefiting the economies of fragile forest communities often dangerously driven to illegal logging simply to feed and care for their families.
Asia Plantation Capital (APC) has not only become the market leaders in sustainable agarwood, along with other plantation industries such as teak, but also major campaigners, lobbyists and educators to the global markets on its importance. Sponsoring and supporting related industry events such as IFEAT (the International Federation of Essential Oils and Aroma Trades) annual conventions, and reintroducing the agarwood species to Sri Lanka where it had all but been wiped out in the wild by illegal loggers, as well as taking the largest promotional stand at the recent UN World Teak Conference held in Bangkok showcasing their advanced plantation monitoring systems.
One company that has spotted APC, and more importantly studied and researched its agarwood plantation model, is Singapore based Sustainable Asset Management. After almost six months of due diligence, inspection visits, meetings with end users and Institutional Investors, Sustainable Asset Management (SAM) has developed what they believe is one of the most carefully structured and balanced forestry investment products available today for HNWI and institutional investors looking at exposure to the asset class as part of a risk balanced portfolio; thatís right, trees are now a risk assessed asset class!
Adam Sprague, Head of Risk Analyses at SAM, clarifies "we decided some time ago that we wanted to find a solid and structured investment wrapper for forestry and plantations which meets all the criteria of stringent institutional and high net worth sophisticated investors. We are working on teak projects, biomass, palm oil and various other proven forest sector and timber related assets; but whilst they are good none of them had the credentials of directly protecting an endangered species as with the agarwood story, and as part of the process creating a new sustainable industry which benefits the investors at the top of the chain all the way down to the local communities on the ground; a net new economy in fact. Whilst most investors will confirm itís the bottom line that really matters, i.e. how much return you can get for your buck, being able to invest in a product that not only provides all the required financial benefits and security but becomes a real force for good is hard to find."
What SAM have done is listen to their institutional clients and create a product that mixes limited numbers of mature CITES approved agarwood trees, in themselves relatively hard to find and valuable from the outset, with new plantings thereby creating a 7 to 8 year investment horizon which has capital growth and income throughout. A unique financial product in a sector where returns are usually either annual and low, or long term and potentially high. This is a balanced structure of income and future returns creating a risk weighted portfolio product with an income of around 8% and variable final IRR of 12 to 24%.
The product is available to funds and sophisticated HNWI investors only in minimum tranches of US$500,000 and presently SAM have access to around US$50million in inventory only which will be managed by APC with leverage from their proven from soil to oil programme.
About Sustainable Asset Management:
Sustainable Asset Management is a private Singapore based company funded by Africasia Private Equity. Africasia focus on providing seed capital and funding for companies within the agricultural domain. Sustainable Asset Management now advises on and deals with all the project evaluation and due diligence of businesses Africasia considers investing in, as well as offering the same service to private investors, institutions and alternative fund managers.
Asia Plantation Capital is an owner and operator of a diverse range of commercial plantation and farming businesses across the Asia-Pacific region and globally, part of the Asia Plantation Capital Group of associated companies. Their focus is on multicultural and diverse plantation projects geared to the domestic and commercial demands of the countries in which they operate. Working closely with and supporting fragile local communities is an underlying core principle of the APC business, providing social and cultural support as well as investment to move these communities away from traditional deforestation and illegal logging activities as a main income source. Established officially in 2008, although operating privately since 2002, the group now has plantation and agricultural projects on four continents with operational projects at various stages in Thailand, Malaysia, Laos, India, Cambodia, Sri Lanka, Mozambique, The Gambia, North America and Europe.
Published at the Investorideas.com Newswire - Big ideas for Global Investors
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