Join me today in the first of a two-part series, as I speak with Peter Chappell, Investment Manager at Finnfund - the Finnish Development Finance Institution which, like the country, has a long history of investing in forests. In our conversation, Peter explains why Finnfund’s mandate is for greenfield investments, and why financial viability is one of their primary impact criteria. We discuss the risks in the emerging markets where Finnfund invests, compared to those in timberland core markets. We discuss how to evaluate risk and the merits of forest investment in emerging markets, and talk about why its important to go in with an experienced partner. Next week, be sure to tune in, where we discuss the impact-side of Finnfund’s forest investment approach with Anne Valto.   

 

“But actually, our thesis is quite strong that ultimately the realisation of these positive impacts can only be sustained through financially viable, financially sustainable, you know, long term, successful businesses.”

Show notes:

Host: Shauna Matkovich - The Forest Link

Producer: Magdalena Laas - https://www.linkedin.com/in/laasmagdalena/

Details

 01:36

Introduction to Finnfund and their approach to forest investment

04:54

Financial instruments used by Finnfund in forest investment

07:02

Timberland in core versus emerging markets

11:03

Real vs perceived risk

13:33

Greenfield vs brownfield

16:27

Tips for investors considering emerging markets for the first time

19:51

Red flags to look out for in emerging market deal evaluation

22:16

Impact in emerging markets vs core markets

27:53

Challenges leading to emerging market track record

30:46

Other benefits of emerging market forest investment

Significant quotes:

[14:48]            "One of the issues we have as a DFI is that actually a pure brown field operation doesn't actually fit our mandate because we need to ensure we're making impact."

[21:10]           "Generally speaking, execution risks are the big risks."

[25:32]          "But actually, our thesis is quite strong that ultimately the realisation of these positive impacts can only be sustained through financially viable, financially sustainable, you know, long term, successful businesses."

Links mentioned:Finnfund: https://www.finnfund.fi/en/

 Sound Library:

1. Nature by MaxKoMusic/Soundcloud
2. Sopwell Woodlands and Scohaboy Bog SAC, Cloughjordan, Co Tipperary, IRELAND by wild_rumpus/Soundcloud

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