-14- DÍA 1

Green Investment: with 2 strategic partners and an European investment bank, Reforesta Peru plans to raise US$ 500 millions by the year 2027.

Reforesta Peru creates global forestry fund for Amazonian Forests

wood, by the year 2050 - according to FAO esti-mates - will supply 90% of the global market. Today it provides only 3.5%.

For the raising of equity ca-pital, Reforesta Perú is pre-paring an alliance with an European Investment Fund and will make a road-show to Europe, Asia, the United States and Canada.Toledo emphasizes that they have the experience and science to reduce the risks of the business: fires and plagues. "We have pre-pared ourselves 30 years to get to this point," he says.

Reforesta Perú and two strategic partners, the entrepreneur Rafael Zúñiga, CEO of food su-pplements

company Fuxion Biotech and Alfredo Lassus, generalmanager of Huayruro Agro-industrial Inmobiliaria SRL have just created the “Fu-xion Amazon Reforestation Fund”. The investment fund, which starts with US$12 MM and 1,000 hectares, has projected to invest US $ 500

million in forestry plan-tations in a period of 10 years.

At the close of this year, it plans to buy an addi-tional 3,000 hectares, which are already being identified with the help of satellite images, says Enrique Toledo, managing director of Refores-ta Perú. He recalls that thegover-nment's goal is to promote commercial forestry conce-ssions on about two million hectares.

Toledo projects that the fund will generate an internal rate of return of 23%. He affirms that its profitability will be guaranteed by the width of the produc-tive chain, from the production of clonal trees in Pucallpa,to the wood proce-ssing.

According to the businessman, his greatest support is the growing dema-nd for plantation

CHALLENGES

According to Carlos Rojas, mana-ger of Capia SAFI, there are "big opportunities" for investments in forest plantations. However, he warns that the business faces several challenges such as the availability of large areas of appropriate land, the develop-ment of a market for native spe-cies and the promotion of fores-try businesses with the help of state subsidies. "The State has to start a long process of giving land in concession and there must be cheap long-term loans with rates of 4% to 5%, "he says.

Juan Carlos Aybar, partner and coordinator for Latin America of the agroforestry investment fund Althelia Ecosphere Capital Partners LLP, with placements of US $ 30 million in Peru, agrees on the challenges. "Still the 'econo-mics' of the business are not yet established," he notes after re-calling that there is no historical data available nor a well develop-ped wood industry, as we pointed out in the previous edition of Dia1, the lack of raw material hits the sector today.

Reforesta Peru was able to define scientific protocols for the development of fast growing clonal trees with project funding from Innovate Peru.

Manuela Zurita

MORE DATA

The new background in context

+ In addition to Ucayali, the Fu-xion fund will look for suitable land for forest plantations in San Martín, Huánuco and Madre de Dios.

+ In March 2016, PwC determined that the return of Reforesta Perú is between 20% and 27% per year for integrated forest plantations. + In Peru, the private investment fund LGX Capital and the Green Climate Fund (multilateral) also operate in the forestry sector.

+ The rate of return in forest fu-nds in the world is 12% to 13%, says Carlos Rojas, Capia SAFI ma-nager. "In Peru, we should have 20% of yield because there are more risks."

August, 17th - 2017DIA 1