Par Forestry Partner LP Shares

For professional or very experienced investors only

This is an opportunity to invest in a portfolio of UK forests managed by Par Forestry Partners. Investors could benefit from a largely tax-free long-term income with a substantial degree of inflation protection and the added benefit of IHT relief although remember tax rules can change and benefits depend on circumstances.

Highlights

  • Diversified forestry portfolio
  • Largely asset backed
  • Largely tax-free index-linked income and tax-free capital growth
  • Free of IHT if held for at least two years and on death
  • Minimum investment – £50,000

Important: The information on this website is for experienced investors. It is not advice nor a research or personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value, so you could get back less than you invest. Whilst Wealth Club and the investment manager are authorised and regulated by the Financial Conduct Authority, the investment itself is unregulated, so you do not have the usual investor protections, including recourse to the UK Financial Services Compensation Scheme.


The offer

The Manager is Par Fund Management Limited, a Scottish private limited company. It is wholly owned and controlled by Par Equity LLP, a venture capital firm who also operate EIS investments and a residential property fund. Founder Paul Atkinson is a serial entrepreneur and investor and oversees all the forestry activities including Par’s forestry fund.

 Through Par’s network and relationship with operator Scottish Woodlands they aim to buy large plantations at reasonable cost, and where possible off-market. Over a three-year investment period, the fund intends to build a diversified portfolio of forests benefitting from advantageous capital grants, mainly Sitka Spruce, of varying ages and a mix of mid and late rotation crops, and will then hold and manage the estate for a further seven years. The expected life of this fund is therefore ten years, but could be extended if market dynamics dictate.

 Distributions to investors will be made as forestry assets are realised, after taking into account the working capital needs of the Fund, on-going fees and priority profit share. Please note no distributions are expected to be made until the later stages of the investment period.

Par Forestry Partners will invest in large scale commercial forestry plantations in the UK, predominantly Scotland, with the aim of providing a well-diversified forestry estate. Returns will be made from the cultivation of trees and where practical from the exploitation of alternative uses for the land such as renewable energy production, renting the land for mobile phone masts, and a range of sporting activities. Two properties were purchased in March 2017

 The fund is expected to have a lifespan of around ten years. Forestry is a long-term investment. However, this doesn’t mean you won’t be able to exit before then. There are mechanisms in place which match willing vendors and purchasers at mutually agreed prices.

This investment is available to Wealth Club clients who have successfully completed an Elective Professional Client Application.

Tax benefits 

Investment in UK commercial forestry can have significant tax benefits. 

  • Inheritance tax: 100% IHT relief after two years due to Business Property Relief (“BPR”), provided you still hold the investment on death. 
  • Capital gains tax: no CGT on gain in value of timber. The underlying land is subject to CGT although most of the gain would be in the value of the timber.
  • Income tax: no income tax on timber revenue. 

Please remember tax benefits depend on circumstances and tax rules can change.

Structure of the investment

The Fund is a Scottish limited partnership. The maximum fund size is £10 million, although this can be extended to £12.5 million if investor demand warrants it. The Fund has scope to borrow up to 30% of net assets. Minimum investment is £50,000.

This is by its nature an illiquid investment, however there is a mechanism in place for transferring shares if a willing buyer and seller can be identified. There is also a mechanism to facilitate the sale of a deceased investor’s shares: the fund will offer the shares at a 5% discount to other investors, although there is no binding obligation.

Risks

This is a long-term and illiquid investment, only available to investors classified as Elective Professional Clients. It is an unregulated collective investment scheme. Capital is at risk. Returns are not guaranteed.

Many factors could affect the performance of the fund. Please carefully read the information memorandum for more details on the risks. 

Fees

There is an establishment costs of 2%, an Annual management 1.5% (reducing to 1% from year 4).  AAll transfers will have a fee of 2% (1% each from transferee and transferor).  There is a winding up fee of 2%.  The Manager will receive a 12.5% profit share provided the Fund’s returns exceed the average IPD Forestry index over the funds  ifetime.  Wealth Club are paid a commission of 1%, plus a share of the annual management fees.There are additional fees and expenses, please see the Information Memorandum for full details.

Our view

There are many appealing features to UK forestry including a track record of tax free income and capital gains as well as environmental benefits. There is clearly a high degree of reliance on the price of timber to drive returns. That said, there are relatively few risks associated with the biological growth and harvesting of the forests which underpins value. The flexibility available with the timing of harvesting timber is a  great safety mechanism not afforded to many other sectors of crop growing which allows the manager more control. While Par is not the largest forestry fund manager, its first forestry fund was successful. This is a long-term investment and there is no annual income for up to 7 years.

If that doesn’t put you off, we believe the other features are very attractive, as are the considerable tax benefits.

This is a long-term investment with no annual income for over two years. If that doesn’t put you off, we believe the other features are attractive, as are the considerable tax benefits. 

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.

The details

Type
Forestry fund
Minimum investment
£50,000
Closing date
Discretionary