FIM Services, the alternative investment specialist in commercial forestry and renewable energy, has launched the second fund-raising for its FIM Sustainable Timber and Energy vehicle.

The timber fund, launched in May 2010 and currently valued at £43.6 million ($69.6 million) at 31 May 2011, aims to raise £20 million in new subscriptions between the present date and 12 December 2011, to further expand its core UK forestry and renewable energy portfolio.

Timber investment, which is free of income tax or capital gains taxes and also provides relief from inheritance tax, has become a niche area for investors seeking stable, long term returns in "real assets" seen as a protection against inflation. Other examples of timber fund vehicles include Timberland Investment Resources Europe, which rolled out its TIR-Europe Global Forestry Fund in June; a year ago, the renewable energy investments firm, Reinvest Partners, launched a unit trust, called RE-Forest Fund. (To view an article on the investment area, click here).

The fund aims to diversify its investment in commercial, sustainable UK forests and in renewable energy projects, based on its continued belief in the strength of the UK timber market coupled with the likely continued increase in global energy prices.

The FIM Sustainable Timber and Energy Fund owns 9,786 hectares – 51 forests – in the UK.  The minimum investment in the fund is £32,700 and it is open via independent financial advisor intermediaries.

The fund continues to draw on the two strands of FIM’s established expertise to provide a structured, targeted investment whose core portfolio will remain commercial forestry (80 per cent). New investors will receive a target distribution of 3 per cent per £10 share from June 2013.