CQuest

The CQuest Fund was established in 2021, with the aim of building a portfolio of high-quality forestry assets benefitting from both carbon and timber production. The fund has already secured 3 properties totalling over 900 hectares, with 600 hectares already planted.

The fund has three assets that can generate revenue – the ability to produce carbon credits, the trees and the land – giving future flexibility to maximise investor returns.

The return over the lifetime of the investment is forecast to be 8-9% p.a (IRR), with first distributions scheduled for 2026.

The forecast returns are based on:

• Selling carbon is expected to generate 11-13% p.a return from years 5-17. Every $10 increase in the sale price of carbon credits would lead to an additional 2-3% p.a return during these carbon sequestering years.
• Revenue from harvesting the trees for timber 25 to 30 years after planting or selling future cutting rights.
• Land ownership with the potential to realise future capital gain of a real asset or the development margins that are generated. Recent valuations gave a 15-20% increase in value for the properties developed, so we anticipate capital gains as additional land is developed.

To view the Fact Sheet about the offer, please click here.

Globally, there is a growing recognition that more needs to be done to reduce greenhouse gas emissions. To create a financial incentive that encourages businesses and individuals to reduce emissions, the New Zealand government set up the Emissions Trading Scheme (ETS) in 2008. This put a price on emissions, by requiring companies to surrender carbon credits or NZUs to offset the greenhouse gases that they produce, or directly reducing their own emissions. Forests such as those in the CQuest Fund can earn NZUs for sequestering carbon, and these can then be sold.

Many commentators believe that carbon prices will need to increase to over $100 a tonne to encourage the scale of change needed to significantly reduce carbon emissions. Every $10 increase in the sale price of carbon credits would lead to an additional 2-3% p.a return during the carbon sequestering period.

Forestry is one of New Zealand’s largest export earners, worth over $6.5bn each year. Radiata Pine is a versatile raw product. Along with the current uses of construction and furniture, there are a range of new applications emerging such as biofuels and as a plastic replacement. This versatility should place the CQuest Fund in a strong position when the trees are harvested to maximise returns.