It took Labour leader Ivana Bacik to ask the question that was on everyone’s lips this week about Coillte.
During leader’s questions in the Dáil she stopped Minister for the Environment, Climate and Communications, Eamonn Ryan in his tracks when she asked: “Has Coillte gone rogue on the government?”
Deputy Bacik was just one of countless politicians who this week launched a relentless assault on the government in relation to the Gresham House-Coillte-backed Irish Strategic Forestry Fund.
The fund aims to provide “up to €200 million capital” to “create new forests” and has already received a €25 million “cornerstone investment” from the Ireland Strategic Investment Fund (ISIF) – which is a state-owned investment fund that invests national savings.
Minister for Agriculture, Food and the Marine, Charlie McConalogue and the Minister of State with responsibility for land use and biodiversity, Pippa Hackett, have spent the last seven days fending off heightened criticism of the fund from elected representatives from every corner of the country.
From the Seanad to the Dáil, to the pavements outside Leinster House, the government has been left in no doubt about the level of hostility that there is to the Irish Strategic Forestry Fund.
MInister McConalogue has repeatedly been urged to halt the deal by representatives from across the political spectrum and by hundreds of protesters who gathered outside Leinster House on Thursday (January 25) to demand that the government “save Irish forests”.
But the minister has unambiguously stated that the deal is done. “Coillte and ISIF have entered into binding contractual arrangements,” he has stressed.
In response to accusations in Dáil that the deal was a “land grab” and that it would push up the price of land and push farmers out of the market for land, Minister McConalogue has said that “the structure of the deal between Coillte, ISIF and Gresham House is not our preferred option”.
Semi-state company
But why did Coillte, a semi-state company that was established in 1989, end up with an “operational management agreement” with the London-headquartered specialist alternative asset manager Gresham House?
Coillte has three businesses: Forestry, land solutions and medite smartply.
Its last set of accounts, published in April 2022, show that it had a very healthy balance sheet.
The semi-state company reported revenues of €422 million for 2021 – up from €285 million in 2020.
The accounts also show that Coillte’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) jumped to €159 million in 2021, significantly higher than the figure it posted in 2020 of €66 million.
Its operating cashflow also jumped from €24 million in 2020 to €73 million in 2021, and its operating profits jumped from €29 million to €124 million in 2021.
One other significant aspect from the 2021 accounts was the level of operating cash that Coillte had on its books compared to the €24 million it had in 2020.
Operating cash
In 2021, the semi-state company ended the year with an operating cash level of €73 million.
Coillte also recommended an “overall dividend payment to the Exchequer of €30 million”, which it claimed was the “highest in the history of the company”.
According to Imelda Hurley, Coillte chief executive officer, the company benefitted from the record levels that timber and panel board hit in 2021 which in turn resulted in “a record financial performance in 2021”.
She added: “The most effective way to ensure our success in delivering a greener future for all is by having the financial strength and resources which allow us to continue building a strong, vibrant commercial business.
“In this regard our financial performance in 2021 is very encouraging.”
Coillte stated that it had entered “2022 on strong financial footing with net cash of €31 million and available debt facilities of €180 million”.
But this was not enough.
Just over nine months later Coillte, which is responsible for managing 440,000/ha – or 7% of the land area of Ireland of primarily forested land – appeared before the Oireachtas Joint Committee on Agriculture, Food and the Marine.
It outlined its new vision for Coillte and said that it wanted to support the creation of 100,000/ha of new forests by 2050.
“Our ambition is to create new forests, manage our existing forests for greater carbon capture and provide more habitats to protect and enhance biodiversity,” Hurley said.
During the December meeting she also told the joint committee that in “order to achieve the 100,000ha, it will be up to €2 billion in terms of cost between now and 2050.
Two forestry funds
She said Coillte had been very clear that it would “need to access capital to do this” and that it would require two forms of funds.
Hurley said the the first fund, the Nature Trust, aims to deliver “new afforestation in terms of native woodlands and to undertake potential nature rehabilitation. The trust will raise money by means of what we call environmental, social, and governance, ESG, or impact investors”.
Hurley also told the joint committee last December that the second fund would be “more focused on what we would call traditional, long-term investors”.
“That fund would be focused more on productive forestry. We do not have the level of capital that is needed, so we need to access capital,” the chief executive of Coillte told members of the committee.
At the time she said there “were third parties involved”, but she was “not in a position to name them at the moment”.
Fund operational in December
Minister McConalogue has said he was aware that the Irish Strategic Forestry Fund “became operational on December 18, 2022” and that he was “informed that week of some of the details of the proposals through correspondence from Coillte”.
He has stressed repeatedly that he was “only aware of the deal after the deal was done” and that the Department of Agriculture, Food and the Marine had not been a signatory on the contract between Gresham House and Coillte.
According to Minister McConalogue, the government has set an overall national target of 450,000/ha of new forests by 2050 and that the Irish Strategic Forestry Fund “will plant less than 1% of that total”.
The next question that the Labour Party leader may raise in the Dáil could be about what price Ireland is willing to pay for that 1%?