​AMF makes first direct forestry investment with €1bn deal

Sweden’s third biggest pension fund is making its first direct investment in forestry, in a deal worth an estimated SEK11bn (€1bn).

AMF – which manages SEK632bn in assets – announced this week that it was to acquire 89.9% of the outstanding shares of BSÖ Holding from Swedish pulp and paper manufacturer BillerudKorsnäs Skog & Industri. BSÖ Holding’s subsidiary Bergvik Skog Öst owns over 317,000 hectares of woodland in central Sweden.

BSÖ Holding was valued at SEK12.2bn on a cash and debt-free basis, AMF said, making its stake worth just under SEK11bn.

Katarina Romberg, AMF’s head of alternative investments, said: “AMF already owns forest indirectly via our holdings in listed forest companies, but now we are also getting a direct investment in well-managed and responsibly-used forests through the purchase of one of Sweden’s largest forest-owning companies.

“Forestry is well suited to our strategy of increasing the proportion of alternative investments such as wind power and infrastructure in the portfolio.”

AMF said that, of Bergvik Skog Öst’s total 363,000 hectares of land, 295,000 hectares was classed as “productive” forest.

BillerudKorsnäs said it was keeping approximately 36,000 hectares of land from the original Bergvik Skog Öst company.

The pulp manufacturer said the value of the sale corresponded to approximately SEK38,500 per hectare of forest. In addition, the company has entered into an agreement in connection with the deal to be the sole buyer of wood produced from Bergvik Skog Öst’s land for the next 15 years.

After that, it would have the right to repurchase the company unless it was offered an extension of the timber agreement to the current terms, the company said.

Petra Einarsson, chief executive of BillerudKorsnäs, said: “With the sale of Bergvik Skog Öst and the agreed wood supply contract from this forestland, we are creating good possibilities for a competitive and stable wood supply, both in the short-term and the long-term. We are keeping a minority stake and will have a long-term co-operation with AMF.”

BillerudKorsnäs said the deal was expected to be completed in the third quarter of 2019, subject to approval from the Swedish Competition Authority.