Munich Re arm goes big for forestry fund

Munich Re arm goes big for forestry fund | Insurance Business Canada

Reinsurance

Munich Re arm goes big for forestry fund

Firm aims for a more ambitious final fund volume, starting from half a billion

Reinsurance

By
Kenneth Araullo

Munich Re’s asset manager has raised new funds to further support its sustainable investments.

MEAG, the asset management arm of the giant reinsurer, has successfully secured $207 million in capital commitments during the initial closing of its MEAG Sustainable Forestry Equity Fund.

This fund, introduced in 2022 in alignment with the EU Taxonomy for ecologically sustainable forest management, aims to contribute to various United Nations Sustainable Development Goals (SDGs).

As per a news release, the fund plans to start investments in the first half of 2024, focusing on forested lands within the United States, New Zealand, and Australia. Additionally, it is committed to investing 5% of its asset volumes in new afforestation projects.

The fund’s initial capital came from German insurers and the pension scheme of a DAX-listed company group, with MEAG aiming for a final fund volume between $500 million and $700 million.

MEAG highlighted the appeal of forestry investments due to their low correlation with other investment classes and their long-term potential for value growth. This growth is driven by increasing global demand for wood, especially in sustainable construction and materials.

A fund that advances ESG initiatives

The firm also noted that the fund offers institutional investors a way to incorporate environmental and social considerations into their portfolios, as forests play a key role in promoting biodiversity, carbon sequestration, and providing employment and recreational areas.

Thomas Bayerl, MEAG’s managing director and global head of illiquid assets, remarked on the fund’s initial success.

“MEAG has decades of experience with forestry investments around the globe, and these have proven to be an important stability factor in our portfolio,” Bayerl said. “In view of the challenging conditions on capital markets right now, we are even happier about the success of the fund’s first closing with more than $200 million.”

Frank Becker, MEAG managing director responsible for institutional clients, also commented on the unique position of forestry investments.

“The forestry asset class is still uncharted territory for many investors. With our many years of expertise, we have been able to help build trust in this exciting asset class. The combination of long-term returns and sustainability is particularly attractive,” Becker said.

MEAG’s status as a subsidiary of Munich Re also positions it to develop needs-based solutions for its clients, Becker says.

Elsewhere, the German reinsurer also recently reported its results for the fiscal year 2023, touting profit targets being exceeded for the third consecutive year.

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