Elworthy-managed fund spends $2m on Gisborne forestry land

BUSINESSDESK: Craigmore Forestry Fund, which is managed by Forbes Elworthy's Craigmore Sustainables, paid $2 million for 511ha of land it wants to convert into forestry as it looks to build plantations down the east coast of the North Island.

The fund now has 9200ha of land running from the East Cape to Riversdale, where it plans to either manage existing forestry operations or plant trees on farming land, according to summary decisions from the Overseas Investment Office.

Some 8700ha came from related party Craigmore Farming Co for an undisclosed amount, while the remainder was bought out of the liquidation of sheep and beef farm Makiri Station, documents lodged with the Companies Office reveal.

Sales of forestry land through real estate agents went for an average $4121 a hectare last month, down from $7762, Real Estate Institute of New Zealand figures show.

The fund needed OIO approval as only 40% of its investors are New Zealanders, with the remainder made up of British, Americans, Dutch and other foreigners.

Craigmore Sustainables manages $70 million of investor capital across 10,000ha of farming and forestry, according to its website. That includes the Elworthy family farm, Craigmore Station, in south Canterbury, which has grown to about 4000ha since Forbes Elworthy inherited it in 2003.

The farming fund focuses on sustainable, grass-fed systems and aims to reflect New Zealand's export mix of between 40% to 60% in dairy, 20% to 40% in beef, sheep and deer, and 10% to 20% in horticulture.

Last year, the forestry assets amounted to about 3500ha and Craigmore was eyeing up a further 4000ha to 5000ha in 2012, a submission on the government's Emissions Trading Scheme says.

At the time, it submitted the ETS was a "major contributor" to its investment decisions, in tandem with potential timber revenues.

Mr Elworthy previously worked at Goldman Sachs and Merrill Lynch before founding financial software firm Credit Market Analysis, which he sold to the Chicago Mercantile Exchange in 2008.

The Elworthy family has deep ties in Timaru, and the late Peter Elworthy was a past-president of Federated Farmers and chairman of the Reserve Bank's independent board.