The Lacan Florestal is the result of years of research and commitment from our team. On top of that, it is the by-product of the trust that investors put in our job. We are proud and caring of what has been seriously developed so far and for that reason we always like to tell how everything began…
The project was sparked in 2008 by the reflections of Lacan’s founding partner, Mr Luiz Augusto Candiota, on the availability of long-term investment opportunities in Brazil, or the lack of it, for institutional investors. Convinced that real interest rates in Brazil would converge in the coming decades to a lower level, Mr Candiota and his team toured across the United States, Canada and Europe to better understand the long-term allocation mindset of foreign institutional investors such as pension funds, sovereign funds and endowments. As expected, it became clear that the investment portfolio of these global investors was less concentrated for Brazilian standards in bonds and stocks and highly dependent on the returns of alternative assets such as currencies, commodities, private equity, infrastructure funds, and for its effective inflationary hedge, timber.
Back to Brazil, the team chose to invest time and resources to fully grasp the characteristics of timber investments, the most promising asset class for institutional investors in light of the country’s competitive advantages and what was already available in the investment industry.
The first step towards the construction of a project with strong foundations was building the best team. To this end, Lacan invited one of Brazil’s most renowned specialists in eucalyptus, Mr José Maria Mendes, who had previously worked for almost thirty years as Head of Forestry at VCP - Votorantim Celulose e Papel (currently Fibria) and had been in charge of over 800,000 hectares of certified eucalyptus planted forests across the country. Mr José Maria, having left VCP to set up his own forestry consulting firm, was the key specialist Lacan needed to run the forestry operation. With enthusiasm, he promptly accepted the challenge and brought along his highly experienced team.
The years of 2009 and 2010 were research-intensive and abounded with field trips, both domestic and international. During this period, Lacan mapped out the advantages and disadvantages of each and every region of the country for the planting of eucalyptus and broadened talks with foreign investors. The main reason for these talks was to adapt the international timber investment fund model to the Brazilian market, reflecting its high standards of governance.
Thereafter, as a means of securing a buyer for the fund’s wood production and thus reduce the risks of the project, Lacan initiated negotiations with a renowned player in the pulp industry. Another two years ensued and Lacan was finally able to sign a strategic partnership agreement between the fund and the buyer in January 2012, enabling the effective raising of capital for the Lacan Timber Investment Fund in the first quarter of 2012. The official inception of the fund took place on April 2nd 2012.
Lacan Timber Fund II, in turn, follows the same strategy of the first project and builds on the partnership established in Fund I with a major player of the pulp industry. Fund II had its inception in April 2016 and its final closing took place in January 2018 with a very high re-up rate from Fund I.
Lacan Florestal Project today has commitments from twenty-nine local pension funds from ten Brazilian states, a global bank with strong presence in Brazil, family offices and a global institutional investor specialized in timber investments.
The pictures above are from the project.