January 27, 2011 / 7:18 PM / 10 years ago

UPDATE 1-AimCo, New Forests scoop up Australia timber lands

* At A$415 mln, one of largest such deals

* 2,500 sq kms of land in six states

* Assets acquired out of receivership (Adds details, quotes, background)

By Jeffrey Jones

CALGARY, Alberta, Jan 27 (Reuters) - A Canadian public-sector pension fund has joined a forestry management firm in a C$415 million (A$415 million) acquisition of Australian timber lands, capitalizing on a failed government investment scheme, the companies said on Thursday.

Alberta Investment Management Corp and a fund run by Australia’s New Forests Pty Ltd are buying the timberland assets of Great Southern Plantations, which include more than 2,500 square km (965 square miles) of land in forestry and agricultural regions in six states.

The pair are buying the assets out of receivership. They will be managed by New Forests, an investment firm specializing in timber lands and environmental markets such as carbon, biodiversity and water.

The lands offer long-term opportunities to make money in numerous ways, Leo de Bever, AimCo’s chief executive, said in an interview. They have been unaffected by the country’s severe flooding, he said.

“There is a lot of optionality to this transaction. Some of this land may eventually revert to agriculture and some of it we may turn into a different kind of forest, for biomass for instance,” de Bever said.

The deal, one of the largest in Australia’s forestry estate business, fits into the fund manager’s stated investment criteria, which include looking for distressed assets in the fields of food, energy and raw materials. De Bever has about 10 years of experience investing in the Australian forestry sector.

“It is a very tricky transaction. It’s got a lot of moving pieces, and very few people could come up with the cash, which is what we did,” said de Bever, whose organization manages about C$70 billion in public pensions and other government funds for the Western Canadian province of Alberta.

“A lot of other people wanted to buy pieces but couldn’t get the financing and so on. We finally got tired of it and said, ‘OK, here’s a price for the whole thing.’”

AimCo has been an active dealmaker, making major investments in recent years in Precision Drilling Corp (PD.TO), Viterra Inc VT.TO and most recently, a six-lane toll road in Chile last month.

Great Southern Plantations was a managed investment company through which retail investors could help fund government efforts to reduce Australia’s shortage of wood products while gaining a tax break. It went into receivership in 2009, a victim of the economic meltdown.

“These are 650 individual pieces that were run by different organizations at one point, so the receiver ends up with all these things and we came along and made a bid for the whole kit and caboodle,” de Bever said.

“This transaction is indicative of the trend to move towards institutional ownership of Australia’s plantation forestry estate, which will allow the industry to consolidate and become internationally competitive,” David Brand, managing director of New Forests, said in a statement.

$1 Canadian=$1.00 Australian Editing by Peter Galloway

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