EDITOR NOTE: It’s very difficult to assess JP Morgan’s latest acquisition of a forest and timberland investment firm. After all, most of us investors never really trusted JPM given the years of market manipulation and metals price suppression. So, now the bank is diversifying its portfolio toward the realm of environmental sustainability, a lateral step in supporting decarbonization, the greening agenda, by purchasing a firm specializing in forest management and timberland investment. Diversification, in itself, is always a good idea. Expanding profitable return sources beyond legacy markets is prudent, perhaps even shrewd. Adopting green practices with foresight toward the future is smart. But the capacity for, and history of, market manipulation leaves many people suspicious. A new leaf turned, or a new extension of rhizomatic toxicity poised to choke the majestic nature out of a natural market?
This week, J.P. Morgan Asset Management announced that its $168 billion Global Alternatives division has acquired forest management and timberland investment firm Campbell Global, LLC. Price and other terms of the deal with Campbell Global’s parent company, $140 billion asset manager BrightSphere Investment Group, were not made public.
Portland, Oregon-based Campbell Global, which has an investment track record spanning more than three decades and manages $5.3 billion in client assets and over 1.7 million acres worldwide, is a leader in global timberland and natural resource investment. The deal will make J.P. Morgan a significant owner of forests in 15 U.S. states, as well as New Zealand, Australia and Chile.
The acquisition was also motivated, in part, by the firm’s desire to enter the emerging market for forest carbon credits. Carbon sequestration in forests worldwide will play an increasingly important role in carbon markets, and in announcing this week’s acquisition, J.P. Morgan Asset Management said it expects to become an active participant in carbon offset markets as they develop.
“This acquisition expands our alternatives offering and demonstrates our desire to integrate sustainability into our business in a way that is meaningful,” said J.P. Morgan Asset Management CEO George Gatch. “Investing in timberland, on behalf of institutional and high net worth individuals, will allow us to apply our expertise in managing real assets to forests, which are a natural solution to many of the world’s climate, biodiversity and social challenges.”
“We have always held that there should be no tradeoff between investing wisely and investing responsibly,” said John Gilleland, Chief Executive Officer of Campbell Global. “We made our first institutional investment in timberland 35 years ago, have since planted over 536 million trees, and emerged as a leader in sustainable forestry. We look forward to continuing these efforts with J.P. Morgan. Importantly, this transaction further positions Campbell Global to serve our existing world-class clients at the highest standard.”
“Acquiring Campbell Global provides us with an opportunity to strengthen and diversify our ESG focus, including building a robust carbon sequestration platform,” said Anton Pil, Global Head of J.P. Morgan Global Alternatives. “Timber investing further enhances our asset class offerings in our alternatives business, ultimately passing along the unique benefits of forest management to our clients. Our knowledge of real estate and transport markets, in particular, is expected to provide opportunities to optimize the usage of timber and wood products more vertically.”
The investment offering will sit within J.P. Morgan’s Global Alternatives franchise, which invests across real assets, including real estate, infrastructure, and transportation and as well as private equity, private debt and hedge funds. Campbell Global adds to this portfolio, filling an asset class gap in an attractive market while also supporting sustainability goals. J.P. Morgan Asset Management says all Campbell Global employees will be retained, and the company will remain headquartered in Portland.
The transaction is expected to close in the third quarter.
Originally posted on Investable Universe