Forestry company in South Africa obtained by New Forests
The African Forestry Impact Platform (AFIP), a co-developed investment fund by British International Investment (BII), has made its second investment through the fund, acquiring a majority stake in South African forestry and sawmill company Rance Timber. This move is part of AFIP's aim to raise up to $500m by the end of 2027, with a presence already established across five African countries - South Africa, Uganda, Tanzania, Mozambique, and Kenya.
Rance Timber, a family-owned business founded in 1910, has grown to employ 1,400 people across its forestry and sawmilling divisions. The company, which started off as a saw milling business, leased forestry assets in the Amathole region of the Eastern Cape from the South African Forestry Company in 2005. Today, Rance Timber manages 14,000 hectares of pine plantations, which include protected indigenous forests, grasslands, riparian zones, and other vegetation types.
Rance Timber's commitment to sustainability is evident, with more than 40% of its land set aside for indigenous forests, grasslands, riparian zones, and other vegetation types, which are protected and enhanced to improve biodiversity and water quality. The company also works diligently on improving the genetics of the trees and silviculture.
New Forests, the company behind the acquisition, focuses on carbon sequestration, biodiversity enhancement, improving livelihoods, and improving gender equity in its forestry operations. Under Kemoli's leadership, New Forests will continue to work with the Rance team to improve the forests and further these key areas of sustainability.
The South African forestry sector, in which Rance Timber operates, presents an attractive investment opportunity. The general fundamentals of the sector are strong, with an attractive construction sector, a solid furniture and joinery sector, and a large design sector. Rance Timber operates two sawmills in the Eastern Cape of South Africa and manufactures various timber products, including structural, industrial, and moulded timber, pine wood chips, and shavings.
The company has built a versatile mill and operates it effectively, with a good reputation within the markets and strong sales distribution channels. Moreover, Rance Timber has a long-term investment view, as the trees grown by the company, such as eucalyptus and pine, take around 10-20 years to mature.
BII anchored the AFIP with a $75m commitment in 2022, and the total raised is around $200m, with commitments from other development finance institutions Finnfund and Norfund. This investment in Rance Timber marks the AFIP's second investment, demonstrating a continued focus on sustainable forestry in Africa.
Environmental impact is a core consideration for Rance Timber, and the company also works with neighbouring villages to improve living conditions for local communities. Excluding its portfolio companies, New Forests directly employs more than 30 foresters around the world.
With this acquisition, the South African forestry sector is likely to see further acquisitions in the future, as the sector presents an attractive investment opportunity.
