Matariki Forests has signed an agreement with Phaunos Timber Fund for a $167 million investment in the Matariki Forestry Group, subject to Overseas Investment Office approval.

Matariki Forests owns the third largest forest estate in New Zealand, comprising 140,000ha.

It is owned by a consortium and is managed by Rayonier New Zealand. The business was withdrawn from sale earlier this year, apparently because buyers had difficulty with funding. The forests are spread around the country.

The investment was welcome as it underlined a positive outlook for the company, said Paul Nicholls, managing director of Rayonier New Zealand.

Phaunos Timber Fund is an investor in timberland and timber related assets managed by FourWinds Capital Management, based in Boston.

Foreigners have been big investors in New Zealand plantation forests, which are regarded as among the best in the world. Large forest investment companies already in New Zealand include Hancock Timber Resource Group.

US forestry company Rayonier owns about 40% of Matariki, AMP Capital Investors and Deutsche Bank's REEF Infrastructure fund are also investors.