Investment horizons in Impact InvestingThe need for long-term capital for sustainable business

Oliver Hanke

CEO Forest Finance Ltd

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ForestFinance Group

• A specialised sustainable forestry investment provider with headquarters in Bonn, Germany who offers more than 18 years of project development and investment expertise in forestry.

• Focus on sustainably-managed tropical mixed forest and agroforestry systems that offer similar rates of return and reduced operational risks compared to conventional timber investments.

• Developed over time into the largest provider of sustainable forestry direct investments in Europe with more than 12 000 investors. ForestFinance now operates € 60 million worth of forestry investments, employing more than 150 people worldwide and a further 540 subcontractors.

• Regional focus on Latin America and Vietnam and involvement in many other projects worldwide.• Advisor to the Green Growth Action Alliance’s new Global Sustainable AgroForestry Fund.

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Some other sustainable providers

• NewForests (Australia)• Salm Boscor (Germany)• Althelia Ecosphere (UK)• The Moringa Partnership (France)• EcoTrust Forest Management (USA)

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What is an investment horizon?

• The total length of time that an investor expects to hold a security or portfolio.

also

• The point in time when you hope to achieve a particular investment goal.

⇒ Used to determine the investor’s income needs and desired risk exposure

⇒ A highly subjective variable that changes over time and is strongly influenced by living

circumstances and goals.

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What is the typical investment horizon of an impact investment?

• Impact investments naturally try to build for (a better) future.

• That means taking a forward looking, patient and disciplined approach that goes beyond

economic cycles and short-term trends.

• The actual investment horizon of an impact investment can vary substantially

• Anything up to 20 or more years is possible (infrastructure, reforestation, etc.)

• … but it will most likely not be less than 3 years.

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Who can afford to wait that long?

• Pension Funds

• Foundations

• Individuals with substantial disposable income and long-term objectives

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When will they do it?

• A compelling story that does not rely on business cycles

• All risks are well understood

• Opportunity to achieve a high return premium for taking illiquidity risks

• All stakeholders are aligned and supportive

• and … when exit opportunities exist!• IPO

• Sale

• Repurchase

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So what about Agro-/Forestry?

• ForestFinance offers investment opportunities in sustainably-managed afforestation or reforestation projects as well as agroforestry projects such as certified cocoa production.

Forestry/timberland as an investment

• Offers low volatility

• Net return potential of 10%+ p.a. with low correlation to financial markets

• Real assets offer a natural hedge against inflation

• Potential for long-term land value appreciation

• Sustainable management practices also reduce operational risks and costs

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Afforestation with mixed native forest

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How to improve?

• Portfolio construction

• Diversification of investments

• Mature and new projects

• Multiple land use models

• Diverse sources of revenue

• Intelligent structuring

Afforestation with mixed native forest

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Thank you

Oliver Hanke

CEO Forest Finance Ltd.

oliver.hanke@forestfinance.com

www.forestfinance.ch