Rance Timber manages 14,000 hectares of pine plantations of which more than 40% is made up of protected indigenous forests, grasslands, riparian zones and other vegetation types to improve biodiversity and water quality.
New Forests, a global investment manager focused on nature-based investment solutions, has taken a majority stake for an undisclosed sum in South African forestry and saw milling company Rance Timber.
This is the second investment through the African Forestry Impact Platform (AFIP), an investment fund co-developed with British International Investment (BII), the UK development finance institution.
Founded in 1910, Rance Timber is a family-owned business which has grown from a one-man operation to a company of 1,400 people working across both the forestry and sawmilling divisions. The company has over 14,000 hectares of pine plantations and two sawmills in the Eastern Cape of South Africa. It manufactures a variety of timber products, such as structural, industrial and moulded timber and pine wood chips and shavings among other things, to markets across the province.
Speaking to Impact Investor, Yida Kemoli, managing director for Africa at New Forests, said that the Rance family will retain a partnership position.
“There have been four generations of foresters in this family. They understand the local forests better than anyone,” he said, adding that in addition to its careful stewardship of the forests, New Forests was attracted to the company’s continuous investment in its people, evidenced by high employee retention rates.
“There are many people who have worked for the business for 10 years or more,” said Kemoli.
“In the world of forestry, it’s a milestone for a forester to harvest a tree he’s planted and at Rance it’s not uncommon to meet people who have been through that,” he added.
African Forestry Impact Platform
BII anchored the AFIP with a $75m commitment in 2022, alongside two other development finance institutions Finnfund and Norfund who committed $48m and $76m respectively, increasing the total raised to around $200m. The fund’s first investment was the acquisition of Green Resources AS, an East African forestry development and wood processing company.
Kemoli said that with the addition of Rance Timber the fund is now present across five African countries – South Africa, Uganda, Tanzania, Mozambique and Kenya. He said that the investment team aims to raise up to $500m by the end of 2027 and takes a long-term view with all of its investments.
“You have to remember that the trees we’re growing such as eucalyptus, take around 10 years to mature and pine takes around 20 years. For the simple reason of biology, you have to take a much longer-term investment view,” he added.
South African forestry sector
Kemoli said that the South African forestry sector is well-established and presents an attractive investment opportunity, with further acquisitions likely in the future.
“The general fundamentals of the South African forestry sector are very strong. The country has an attractive construction sector, as well as a solid furniture and joinery sector and a large design sector, so being able to channel raw materials into that is very interesting,” he said.
Kemoli explained that Rance Timber started off as a saw milling business and had leased forestry assets in the Amathole region of the Eastern Cape, from the South African Forestry Company, a state-owned forestry company, in 2005.
“They have continued to invest into improving the genetics of the trees and silviculture, which is the science of managing forests,” he said, adding that as well as managing the plantations well, the company has built a very versatile mill.
“They operate the mill extremely well, and they have a good reputation within the markets with strong sales distribution channels. Underlying all of that is a great management team and great staff,” he added.
New Forests says Rance Timber has a strong commitment to sustainability with more than 40% of land set aside for indigenous forests, grasslands, riparian zones and other vegetation types, which are protected and enhanced to improve biodiversity and water quality.
“Environmental impact is a core consideration but just as important is the work the company does with the villages that neighbour the various plantations. As part of New Forests, we will continue to work with the Rance team to improve the forests, focusing on the four key areas of carbon sequestration, biodiversity enhancement, improving livelihoods – working with local communities, and improving gender equity,” said Kemoli.
Excluding its portfolio companies, New Forests directly employs more than 30 foresters around the world.
