Matariki Forests' new shareholder Phaunos Timber Fund sees New Zealand as a stable and receptive economy to invest in with exposure to some of the fastest growing countries in the world.

Phaunos, an investment vehicle based in Guernsey in the Channel Islands, announced on Christmas Eve plans to invest $167 million in shares and loans to Matariki Forests, which owns six New Zealand forest estates.

The investment in New Zealand is the first by Phaunos and among the biggest it has made so far, according to its accounts and investment statements.

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 The business was withdrawn from sale earlier this year, apparently because buyers had difficulty with funding.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.

New Zealand's third-largest forest estate, Matariki Forests, has been withdrawn from sale.

United States forestry company Rayonier, Matariki's 40 percent owner, had been hoping to sell the joint venture for up to $1 billion.

But a statement today said the shareholders had decided to retain the assets, which include about 140,000ha of radiata pine forest throughout the country.

Rayonier New Zealand managing director Paul Nicholls said the sale process had attracted strong interest from a broad range of parties.

As the Matariki Forests sale moves into its final stages, international interest is growing despite the turmoil in credit markets.

Paul Nichols of Rayonier New Zealand, which manages Matariki Forests, says there are 12 serious buyers expressing interest for the 140,000ha estate.

Indicative bids should start coming in some time in the next 10 days, once the sale flier is sent out today, he says.

The tender process has an estimated closing date of “before Christmas” with a final sale expected in quarter one 2009.