Searchlight’s Gresham House closes £300m natural capital fund

The Forest Growth and Sustainability fund will generate returns by timberland sales as well as carbon credit generation.

Gresham House, a UK-based real assets fund manager soon to be acquired by Searchlight Capital, has closed its debut natural capital fund on target on £300 million ($370 million; €345 million).

The Gresham House Forest Growth and Sustainability fund’s strategy includes sales of both timberland and carbon credits, and growth in the value of assets. It will be invested in planting projects to develop new woodlands and existing woodlands.

In the nascent area of natural capital strategies, products are being launched that either combine financial returns with carbon credits, or that exclusively deliver carbon credits to LPs. Folium Capital, established by former investors at the Harvard Management Company, launched a strategy earlier this year that also combines timberland and carbon credit sales.

Manulife and Stafford Capital Partners have both launched strategies that will sell credits to distribute income to LPs. Climate Asset Management, the joint venture by HSBC and Pollination, has a strategy that will distribute credits directly to corporate LPs to sell or use for offsets at their discretion. It also has a financial returns-led natural capital strategy.

Launched in mid-2021, Gresham House’s fund’s LP base includes several UK pension funds and institutions: East Riding of Yorkshire County Council Pension Fund, the Pension Protection Fund, the National Trust, the Scottish National Investment Bank and Worcestershire County Council Pension Fund. For Worcestershire’s chair Elizabeth Eyre, “Forestry has proven a valuable diversifier for our portfolio, while also delivering meaningful benefits in terms of reducing emissions.”

Gresham House is also raising place-based impact and energy storage funds.