Private equity player Harald Orneberg sold his fund, then headed for Brazil to form The Forest Co. and grow (money on) trees
When Harald Orneberg sold his private equity fund, ORN Capital, to British insurance giant Aviva in 2006, he became an indentured servant of sorts. As part of the deal, Orneberg was contracted to work for Aviva for a year, which turned out to be the longest year of his life. "Working for a large company," he says, "was like wading in molasses."
After fulfilling his contractual obligations, Orneberg, 47, decided to return to the business he had grown up around as a boy in Sweden: forestry. It was a decision facilitated by the rise of the Chinese paper industry, which was boosting pulp prices. Much more important, it was a field that had nothing to do with his previous career. "The rate of tree growing is independent of the financial markets," he says. "The tree doesn't know what is written in The Wall Street Journal. It doesn't even know that one day it may become The Wall Street Journal."
After hiring a consulting firm to find out which country had the best forests available for industrial use, Orneberg settled on Brazil, which had the highest tree growth rate and the most available land. In 2007 he formed The Forest Co. and, the next year, purchased two farms 560 miles north of São Paulo. Orneberg started planting pine and eucalyptus to supply the pig iron industry. The trees are used to make wood-based charcoal and are also sold as raw material to China, Russia, and the Middle East.
By spring of 2009, Orneberg had raised $50 million in investments—including $8 million of his own money—mainly from Nordic insurance companies and pension funds. This spring he closed on the next round: $126 million from European investors and church foundations.
Despite having only six employees, Orneberg is preparing for a $500 million initial public offering in Stockholm. In the meantime he's developing a resort community near one of his farms. After three years of almost constant travel, he's finally taking up residence in São Paulo. Although his life has hardly slowed down. "Things are so intense in São Paulo that I have to go to New York to chill out," he says.
THE PAPER CHASE
• Cost of buying farmland and raw materials: $50 million. $8 million came out of Orneberg's own pocket
• Cost of planting an acre of pine and eucalyptus trees on Orneberg's two farms: $1,100
• The total number of acres of trees planted every year by The Forest Co.: 25,000
• Number of full-time employees, including Orneberg, at The Forest Co.: 7
Data: The Forest Co.