Posted by Anyone looking to invest via Debitum these days can’t avoid the assets of the “Latvian Forest Development Fund”.
This new loan originator, active on the Debitum marketplace since February 2025, is a Latvia-based company offering investments in the Latvian forestry sector.
After my recent analysis of Sandbox Funding was very well received, we will today take a closer look at LFDF’s business model, who’s behind the company, and how risky this investment appears from an investor’s perspective.
For a detailed analysis of the Latvian P2P lending marketplace, which ranked second out of 30 P2P platforms in this year’s community voting, I recommend reading my Debitum review.
What is the LFDF?
The Latvian Forest Development Fund (LFDF) is a forestry-focused investment fund founded in April 2023 and based in Latvia. The fund’s business model is based on purchasing forest land in Latvia, managing and developing it, increasing its value, and later selling it at a profit.
On Debitum, investors have the opportunity to participate in the acquisition of forestry land. In return, they receive interest rates of up to 14.5%, with loan terms ranging from 3 to 24 months.
Who is behind the LFDF?
The fund’s legal name is SIA “Latvijas Meža Attīstības Fonds”. It is a limited liability company that was registered in the Latvian commercial register on April 6, 2023.
This company is 100% owned by the Latvian SIA “Intelligent Innovations”. The beneficial owner of that entity is Latvian Janis Upenieks, who is considered an experienced business person in the Latvian forestry industry.
Previously, he served as a board member at the Bono Group, a Latvian wood processing company that some investors may already be familiar with from Debitum. At LFDF, he is both CEO and Chairman of the Supervisory Board.
How does the business model work?
The Latvian Forest Development Fund specializes in acquiring and upgrading undervalued forest land. These assets are then transformed into profitable investments through effective management and sustainable practices.
LFDF acts as an intermediary between independent forest owners and large institutional buyers, such as IKEA.
The transformation of forest land into institutional-grade assets involves the following steps:
- The fund acquires land from owners who typically possess between 10 and 50 hectares.
- The fund takes over full management of the land. This includes timber harvesting, export, land optimization, and legal preparation for resale.
- LFDF consolidates the assets into a structured portfolio, allowing institutional investors to acquire large-scale forestry investments in a single transaction.
Monetization
How does LFDF generate revenue? In 2024, the fund reported a turnover of nearly EUR 3.9 million. This revenue is primarily derived from two sources:
Sale of forest land with profit margin (EUR 3.38 million): At the core of LFDF’s business model is the transformation of fragmented forest plots into consolidated portfolios, which are then sold to institutional investors. Some parcels are also sold individually to local farmers, as many forest properties include small agricultural sections. By the end of 2024, the fund had acquired 2,600 hectares of forest land and successfully sold 800 hectares, achieving an average profit margin of 35% per transaction.
Sale of timber and forestry products (EUR 502K): The sale of harvested timber meets growing demand in sectors such as construction and furniture manufacturing. Sales are mainly directed at customers in the Baltics and Scandinavia. Lower-grade wood is processed into biomass and pulpwood (important raw materials for heating and industrial processes across Europe). These multiple utilization paths (monetizing timber, farmland, and biomass) allow for steady cash flows throughout the investment cycle, independent of land resale.
What is LFDF’s financial situation?
At the end of April, the financial report for the previous year has been submitted. According to the report, the Latvian Forest Development Fund was already able to generate a profit of EUR 70,000 in its second fiscal year. In addition, the company holds equity capital of nearly EUR 1.5 million, providing substantial reserves to support further growth.
The company is currently debt-free, apart from temporary project financing. Liquidity is maintained through project income as well as private capital injections from the shareholders.
Financing
The acquisition of forest land requires a lot of money. Therefore, LFDF uses short-term loans to complete acquisitions more quickly, before long-term refinancing through bank loans or direct investors takes place.
The loans via Debitum serve as a bridge and are typically repaid within 3 to 24 months. The interest from investor-side speaks for itself: Within the first 3 months, more than EUR 7 million in LFDF assets have already been financed by Debitum investors.
Based on the information outlined in the fund’s prospectus, the Latvian Forest Development Fund (LFDF) operates under strict capital-raising limitations tied directly to the value of assets recorded on its balance sheet. This means that LFDF is not permitted to raise more capital than it currently holds in tangible assets, such as forest land. Therefore, the fund’s ability to acquire new capital is capped by the existing asset base, ensuring a conservative and asset-backed financial structure.
Latvian Forestry Sector
Let’s take a step back. Why is forestry in Latvia so attractive? Several factors contribute to this:
- Strong Growth Potential: Land prices are undervalued compared to Western Europe.
- Land Value Appreciation: The prices for Latvian forest land have steadily increased between 2016 and 2024.
- Growing (Timber) Demand: Consumption in construction, energy, and manufacturing is continuously rising.
Forests cover 54% of Latvia, and the forestry and agriculture sectors constitute the largest share of the Latvian GDP.
Market Participants and Competition
Professional investment funds are already active in the market. Their presence is a positive development, as they provide liquidity to forest owners.
However, these funds tend to focus on acquiring larger plots of land, rather than directly dealing with smaller land purchases and the creation of forestry portfolios. This is a niche that LFDF has been attempting to occupy since 2023.
What Risks Do Investors Face?
The loans funded through Debitum are secured with a first-ranking mortgage on the corresponding forest land. In the event of liquidation or restructuring, this structure ensures that Debitum investors have priority claims on the pledged collateral.
Apart from this, there are many structural protections for investors. These primarily include a controlled financing structure that ensures the investment risk is fully covered by assets. Additionally, diversified revenue sources from timber harvesting, land sales, and biomass production help ensure a steady cash flow for repayments.
However, I see specific risks in two areas.
Industry-Specific Risks
Forestry is a large and rapidly growing sector in Latvia. However, even though investments in forest land are inflation-protected and long-term stable, there are still industry-specific risks.
Despite the presence of large players in the market, the sale of forest land can take months, leading to a temporary lack of liquidity. Additionally, fluctuations in timber prices can negatively impact the cash flow situation. Political interventions or new environmental regulations also pose a significant risk that should not be underestimated.
Corporate Risk
The LFDF is debt-free, profitable, and has a controlled financing structure. Financially, there don’t appear to be any immediate problem areas.
However, the fund is still a relatively young company with a limited track record, which does carry some risk in terms of operational execution. Particularly, the dependency on a few key individuals (such as the CEO) should be taken into account.
Conclusion: Is an Investment Worth It?
The LFDF offers an exciting alternative investment in the P2P market. The combination of real collateral, a transparent business model, and attractive interest rates makes the offer appealing, especially for investors looking for shorter terms and secured loans.
However, it’s important to recognize that the forestry niche is complex and not directly comparable to traditional consumer or real estate loans. Those who consider investing should take the time to deeply understand this asset class. Additionally, the limited company history of the Latvian Forest Development Fund should not be underestimated either.
My conclusion: Interesting business model, appealing niche, convincing collateral, but (still) not a guaranteed success. For experienced investors with a risk-conscious mindset, it’s definitely worth a closer look.
Personally, I plan to invest a smaller position in LFDF’s assets and will continue to monitor the topic.
Video of LFDF Analysis
I’m Denny Neidhardt, the founder of re:think P2P. On this blog, I help retail investors make smarter, well-informed investment decisions in the world of P2P lending. Since 2019, I’ve been publishing in-depth analyses, platform reviews, and risk assessments to bring more transparency to this investment space. My goal is to challenge marketing claims, question developments, and empower investors with honest, independent insights.