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Phaunos Timber Fund Limited (the “Company”) is a closed ended investment company registered in Guernsey which aims to provide its shareholders with attractive long term total returns through a diversified global portfolio of timberland and timber-related investments. FourWinds Capital Management is the Investment Manager of the Company.
The Company has a broadly diversified portfolio including investments in North America, South America, Africa, Asia, and Australasia and the Investment Manager’s goal is to enlarge commitments in the regions where investments have already been made.
Launched in 2006, the Company has approximately US$622 million of assets at 30 June 2011. The Company completed its programme of full investment by the year-end, and held a cash reserve for committed projects and working capital.
The Ordinary Shares of the Company are admitted to trading on the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange. The Ordinary Shares are also admitted to listing and trading on the CISX.
The Company's ticker is PTF. Its capital is denominated in US Dollars. The Company does not have a fixed life.
The Company’s investment objective is to provide shareholders with attractive long term total returns, predominantly expected to be in the form of capital appreciation but with some income, through a diversified portfolio of timberland and timber-related investments. Full details of the Company's investment objective and policy can be found in its prospectus.
The Company's Portfolio (the "Portfolio") is diversified through investment in a broad range of investment strategies and vehicles including, but not limited to, investment in a variety of tree species, tree age classes and a diversified range of geographical timberland markets in order to provide sustainable returns, to control volatility and to manage risks. There are no predetermined geographical limits on investments made by the Company. The investment focus of the Company includes both investments in well established markets and investments in less developed timberland markets. The Company will invest in at least four different regions of the world. No single country (or region of the US) will represent more than 40 per cent. of gross assets of the Company and no continent more than 60 per cent. of gross assets of the Company. Generally, the Company will not invest in securities carrying unlimited liability and no single investment or investment in the securities of one company may, at the time of acquisition, exceed 30 per cent. of gross assets of the Company. For these purposes, where the Company invests in a portfolio of assets, each underlying individual asset shall be treated as a single investment and where the Company invests by means of a holding company, joint venture or similar investment or investment vehicle, each underlying property or similar asset shall be treated as a single investment.
The Company’s investment strategy is to build a diversified portfolio of timberland properties and timberland-related investments through a research-led ethically and socially responsible investment process designed to identify and acquire timberland, or forestry, or related investment vehicles or structures related to these vehicles. The strategy is intended to allow the Company to build an optimised timberland portfolio in terms of geographical allocation, age class and species that will maximise after-tax returns while seeking to control volatility and limit downside risk exposure. The Company believes that this approach generates both current income and long term capital appreciation for shareholders.
Different age classes of tree provide harvestable timber over time and diversification by species and geography provide exposure to both different growth rates and different market segments/prices. Harvested land is generally either replanted or allowed to regenerate naturally, as appropriate. Where the Company disposes of its properties they will either be sold as timberlands or, where practicable, for an alternative use which commands a higher price, being the “Highest and Best Use”.
The Company has sought exposure to larger tracts of commercial timberland, as well as reviewing opportunities for smaller tracts or groups of smaller tracts where those opportunities provide higher return potential or exposure to niche markets.
The Company works with market-leading, major timber management groups and experienced local forest managers in the selection, acquisition and management of its timber investments. Because of the broad international mandate of the Company and its ability to work with a diverse spectrum of leading timber managers and investors, the Investment Manager believes that the Company has the opportunity to evaluate and consider participation in both well-known, limited access investments or more exclusive specialist opportunities. This scope allows the Company to analyse and select both partners and investment opportunities that the Investment Manager considers best suit the needs of the shareholders and allow the Company to build a well-diversified portfolio.
Investments in the Portfolio are currently, and will in the future be, made in currencies other than US Dollars and distributions and income from or the proceeds from the disposal of certain investments in the Portfolio will be realised in currencies other than US Dollars. Consequently, the value of non-US Dollar denominated investments in the Portfolio will be affected by currency movements and will fall if the US Dollar appreciates against the currency in which such investments are denominated. In order to hedge against interest rate risks or currency risk, the Company may, where appropriate, also enter into forward interest rate agreements, spot or forward currency agreements, interest rates and bond futures contracts and interest rate swaps and purchase and enter into put or call options on interest rates or currency rates and put or call options on futuresof interest rates or currency rates.
The Company expects to generate cash flow to meet working capital requirements, with any surplus net income potentially to be distributed by way of dividend payments, by the harvest and sale of timber growing on invested properties or investment vehicles, as well as through secondary sources of return from those properties and investment vehicles. Additional sources of return could include, but are not limited to, recreational licences, outsourced utilisation of mineral or water rights, or carbon credits.
No assurance can be given that the Company will achieve its investment objective, and the investment results may vary substantially over time and from period to period. Past results are not indicative of future performance. The Company's business is dependent on many factors and may be affected by various risks, details of which are set out in the section entitled "Risk factors" in the Company's prospectus.
It is the intention of the Company to seek investments that meet or exceed the guidelines set out in the Sustainable Forestry Initiative and, whenever possible and practicable, to certify the lands under the Forest Stewardship Council Guidelines.
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