Forestry is one of New Zealand’s largest annual export revenues, employing 35,000+ people and contributing to 1.6% of New Zealand’s GDP. Kelt Capital, after decades of experience helping clients in both the timber and carbon industries, has identified forestry as a strategic industry to be part of, especially as the world transitions towards a sustainable future.
In 2019, Kelt Capital began building its own forestry portfolio, with the acquisition of a number of properties across the North Island and intends to continue expanding its forestry portfolio, with ambitions to position itself as a market leader.
Kelt Capital owns five forestry properties across the North Island in Northland, Hawke’s Bay and Wairarapa.
As part of its wider acquisition strategy, Kelt Capital expects to continue to grow this portfolio and capitalise on this future facing industry for many years to come.
Over the last three decades, Kelt Capital has acted for a range of clients in forestry. Initially this was focussed purely on timber production but with the launch of the ETS in 2008, it transitioned to including carbon sequestration.
This has led to Kelt Capital developing an intrinsic understanding of the impact of the ETS on the industry, both today and moving into the future.
The New Zealand forestry industry dates back to 1930 when vast areas of land was planted in Pinus radiata to address growing timber shortages.
Today there are 1.69 million hectares of sustainably managed exotic plantation forests in New Zealand, 7% of the total land area. Pinus radiata makes up 90% of the exotic plantation area, with douglas-fir accounting for 6%, the balance made up of eucalypts and other species.
2008 changed the shape of the industry with the introduction of the ETS, a scheme resulting in Crown-issued carbon credits (NZU’s) for forests planted after 1989. This introduction meant that a Pinus radiata forest now had two forms of income (timber revenue upon harvest and the sale of NZU’s as sequestered).
Following the introduction of the ETS, Kelt Capital continued to act for clients but developed a range of new financial models to help its clients best capitalise on the new opportunity.