Earth Capital Partners opens Latin America forestry fund for investment

London-based Earth Capital Partners has launched its ECP Forestry Fund One LP Fund investing in sustainable timber plantations in Latin America.

The fund, targeting up to $300 million in investment, will have a 10-year maturity and expects to invest in up to eight projects in the region.

Investors will be expected to put up a minimum investment of $10 million. The management fee will be 1.5% with a 20% performance fee.

Stanley Fink, chairman at ECP, commented: “The fund provides a vehicle for institutional investors to engage in forestry and biomass in Brazil and Latin America, which offer attractive returns coupled to strong sustainability benefits. ECP aims to reach a first close for this fund later in 2010 and a final close in 2011.”

ECP expects to generate solid non-correlated returns through its ownership of productive land and fast growing sustainable timber.

Bosworth Monck, ECP’s head of sustainable agriculture and forestry, told Hedge Funds Review  Latin American countries such as Brazil offered huge opportunities.

He acknowledged although in the initial stages, there had been significant interest from investors .

Some of the projects proposed include planting eucalyptus trees on degraded agricultural land such as former cattle ranches. Monck said  within seven years, the eucalyptus trees can be cut down and turned into charcoal for the iron and steel industry.

“Trees have a myriad of end markets and there are many end uses for wood. The key component is cost. Latin America is at the forefront of development of species and clones and management techniques of plantations. They are among the most advanced in the world,” noted Monck.

He added that ECP hoped to find more opportunities in Latin America, particularly in Colombia and Central American states.