Latvian Forest Development Fund: Analysis, Risks & Current Allegations (2026)

With an outstanding portfolio of just under EUR 52 million, the Latvian Forest Development Fund (LFDF) is currently the largest lender on the P2P platform Debitum (approx. 86% of the outstanding portfolio; as of April 2026).

This represents quite impressive growth, considering that the Latvia-based company, which offers investments in the Latvian forestry sector, only joined the Debitum marketplace in February 2025.

In this article, we look at the LFDF’s business model, who or what exactly is behind it, and what risks investors need to be aware of.

We also assess the current allegations that have been published regarding the connections between Debitum and the LFDF.

A detailed analysis of the Latvian P2P lending marketplace can be found in my Debitum Review on the blog (still being updated).

What is the LFDF?

The Latvian Forest Development Fund (LFDF) is a forestry-oriented investment fund founded in April 2023, headquartered in Latvia. The fund’s business model is based on purchasing forested land in Latvia, managing it, increasing its value, and later selling it at a profit.

The fund focuses specifically on small-scale forest areas typically between 10 and 50 hectares owned by private landowners. These areas are generally of no interest to institutional investors, as they are too small and fragmented to be managed economically.

The LFDF acts as an aggregator: It bundles these individual plots into larger, structured portfolios that can then be sold to institutional buyers.

Latvia offers a structurally attractive environment for this business model. Forests cover around 54% of the country’s land area, forestry is one of the most important economic sectors, and land prices for woodland remain well below Western European levels.

On Debitum, investors have the opportunity to participate in the acquisition of forestry land, receiving interest rates of up to 15% with terms ranging from 3 to 36 months.

My initial assessment of an LFDF investment (May 2025) is available in this video:

Who is Behind the LFDF?

The fund’s legal name is SIA “Latvijas Meža Attīstības Fonds”. It is a limited liability company registered in the Latvian commercial register on April 6, 2023.

This company is 100% owned by the Latvian company SIA “Intelligent Innovations”, whose beneficial owner is the Latvian national Janis Upenieks. He is considered an experienced businessman in Latvian forestry business.

Previously, he served as a board member of the Bono Group, a Latvian wood processing group that experienced investors will already know from Debitum. Since March 2025, he is also the Parliamentary Secretary of State at the Latvian Ministry of Finance.

Notably: Since 2011, he has held the status of a Politically Exposed Person (PEP). In the LFDF prospectuses, where the risks arising from the interests of the beneficial owner are listed (“Beneficiaries Interest Risk”), there is however no mention that the LFDF’s owner holds a senior government position.

Since August 2025, the CEO of the Latvian Forest Development Fund has been the Latvian national Edgars Birks, who also has several years of experience in the forestry sector.

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.

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.

Monetization

How does the LFDF make money?

In 2025, the fund generated revenue of around EUR 10.8 million. This revenue comes mainly from two sources.

Sale of Logging Rights: EUR 9.49 million (87%). The sale of timber harvests can serve growing demand in construction or furniture production. Lower-quality timber is converted into biomass and pulpwood, important raw materials for heating and industrial processes. The variety of end-uses allows for regular cash flows throughout the entire investment cycle, regardless of pure resale.

Sale of Forest Areas: EUR 1.30 million (12%). At the heart of the business model is the transformation of fragmented forest areas into consolidated portfolios to be sold to institutional investors. Individual plots are also sometimes sold to local farmers, as many forest areas include individual agricultural sections.

An interesting observation can be made when comparing the last two years.

While land sales generated the main revenue in 2024 with EUR 3.38 million (87%), this position amounted to only EUR 1.30 million in 2025. Instead, the sale of logging rights dominated in 2025 with EUR 9.49 million (87%), having accounted for only 13% of revenue the year before.

In the context of the current allegations discussed later in this article, the shift in the business model can be interpreted in two ways:

1. If the LFDF has indeed been primarily selling logging rights rather than land, this would in part be a plausible explanation for why the inventory value in the balance sheet is far above cadastral prices. The timber value is real, operationally utilised and clearly generates revenue. This would support the core argument in Debitum’s statements.
2. The sale of logging rights at this scale means that significant volumes of timber have been extracted from the acquired areas. Upon my enquiry, Debitum named the buyers of the logging rights. These were said to have been predominantly BONO SIA, the same company that according to the current allegations is also the second-largest land seller to the LFDF (at an average premium of 31%).

Debitum justified this partnership with plausible strategic arguments: BONO is one of Latvia’s largest timber exporters, with infrastructure, logistics and access to international markets, offering the LFDF a reliable sales channel independent of local price fluctuations.

What remains unanswered: On what terms did BONO purchase these logging rights? Without this information, it is impossible to assess whether the LFDF achieved market-rate prices or whether value was also being extracted from the fund on the sales side.

The only established fact is that the same corporate network sits on both sides of the key transactions. As a seller in land purchases and as a buyer in timber sales.

What is LFDF’s Financial Situation?

In May 2026, the LFDF published an audited business report for 2025. How should the results be assessed?

The LFDF grew its revenue from EUR 3.9 million to EUR 10.8 million. Net profit came in at just under EUR 1.6 million, representing a net margin of 14.5%. Overall, solid and encouraging figures.

It should be noted that the reported profit assumes that the inventory value of EUR 36.8 million has been correctly assessed. Should the average premiums of 50% documented later in this article largely represent value transfers to affiliated companies, the actual inventory value would be (significantly) lower, and the reported profit would likewise be lower, potentially even negative.

As the statistics on Debitum already suggest, the LFDF demonstrated strong growth in 2025.

The balance sheet total increased from EUR 9.3 million to EUR 38.5 million, while inventory grew from EUR 8.6 million to EUR 36.8 million.

This growth was almost entirely debt-financed:

• Long-term loans: EUR 13.5 million
• Short-term loans: EUR 18.8 million
• Trade payables: EUR 2.8 million

In total, external financing amounts to approximately EUR 35.1 million, of which EUR 32.3 million consists of loans primarily from financing via Debitum.

The short-term loans (EUR 18.8 million) and payables (EUR 2.8 million) underline how heavily the LFDF depends on continuous refinancing.

External Financing

Acquiring forest areas is capital-intensive. The LFDF therefore uses short-term loans to complete acquisitions faster, before long-term refinancing through bank loans or direct investors is arranged.

The loans via Debitum thus serve as bridging finance and are generally repaid within 3 to 36 months. The interest speaks for itself: 14 months after the LFDF’s launch on Debitum, the outstanding portfolio on the P2P marketplace already stands at EUR 52 million.

The LFDF prospectus also reveals an interesting observation regarding the rules for raising capital. These are directly linked to the value of the assets reported on the balance sheet through a “loan-to-value clause”.

This means that the outstanding note amount may at no time exceed 91% of LFDF’s current assets. That is the combined value of inventory, receivables, and cash.

The fund’s ability to raise new capital is therefore directly tied to its existing asset base. If the portfolio grows, the room for additional financing also increases. If the portfolio is shrinking, the fund must have less capital outstanding.

What Risks Do Investors Face?

Aside from the criticisms currently under discussion, which are addressed in the next section, investors should first familiarise themselves with the fundamental risks associated with investments in the forestry sector. These risks relate both to the industry itself and to the specific business model of the LFDF.

Industry Risks

Investments in forest areas are fundamentally subject to specific risks inherent to forestry. These include in particular market cycles in timber prices, the limited liquidity of woodland, and natural influences on the value of the assets.

Timber Price Cycles: The forestry sector is heavily dependent on developments in international timber markets. Economic cycles can lead to significant fluctuations in prices for wood products. Sales revenues or harvest proceeds may therefore turn out lower than originally assumed, which can significantly impact the profitability of forestry projects.

Liquidity of Woodland: Although forest areas are fundamentally to be regarded as safe and long-term assets, liquidity can be limited. Specific site characteristics or regional market conditions can make it difficult to sell larger forest areas. Realising collateral can therefore be time-consuming.

Valuation of Assets: Timber is a key component of the value of forest areas. The valuation of these assets is often based on assumptions (tree species, age, growth, timber quality, etc.) that may differ from actual achievable market prices.

Environmental Influences and Regulation: Forestry projects are exposed to natural risks such as pest infestations, diseases or extreme weather events, which can damage forest areas and reduce the economic value of a project. Similarly, regulatory changes, for example in the areas of nature conservation or forest policy, can affect the management of forest areas.

Company-Specific Risks

In addition to general industry risks, the risks relating to the specific implementation of the business model should also be considered. These include questions about the valuation of forest areas, portfolio composition and the implementation of an exit strategy.

Concentration on Individual Assets: Depending on the portfolio structure, a forestry fund may have a relatively high concentration on certain properties or regions. Low diversification therefore generally increases dependence on individual projects.

Valuation Model for Forest Areas: The valuation of forest areas and timber stocks plays a central role in accounting and in assessing company value. For investors and outside parties, it is often difficult to understand the valuation models and the various underlying assumptions in detail. Particularly when only limited information about individual properties is published.

Exit Strategy: The business model of forestry projects such as the LFDF is often based on selling forest areas at a profit after a certain holding period or generating returns through timber harvesting. However, the implementation of an exit strategy depends heavily on market conditions and demand for such areas.

Operational Execution: The economic success of a forestry project also depends on operational execution, including:

• Selection and acquisition of suitable land
• Efficient forest management
• Sustainable forestry planning
• Successful marketing of timber resources

Misjudgements in these areas can have a long-term negative impact on performance.

Structural and Platform Risks

In addition to industry-specific and company-related risks, the structure of the financing also plays an important role. In case of LFDF, investors on Debitum do not acquire direct ownership rights to the forest areas. Instead, they invest in structured financial instruments secured by the underlying assets.

If problems arise, the enforcement of the collateral will depend not only on the value of the underlying assets, but also on the legal structure of the financing and the practical enforceability of the collateral.

Additionally, investors face a certain platform risk, as the processing of investments is handled through an intermediary, in this case Debitum.

Current Allegations (2026), Assessment and Evaluation

Over the past few weeks, several critical points regarding the structure surrounding Debitum Investments and the Latvian Forest Development Fund have been publicly discussed. The starting point was a detailed analysis by a blogger, which examined in particular transactions between the LFDF and various affiliated companies.

The article is based on 652 analysed land registry entries and 52 annual reports from 12 companies. In response to a statement from Debitum / LFDF, a second article by the blogger was then published.

The content of the articles is quite serious. The P2P platform is accused, among other things, of excessive price mark-ups by affiliated insider companies, an unexplained inventory gap of EUR 24.6 million, and systematically incorrect disclosures in annual reports.

After I submitted several follow-up questions to Debitum and the LFDF, the following is an assessment of the specific allegations:

• What exactly is Debitum / the LFDF accused of?
• How have the platform and the lender responded to the allegations?
• How should the situation be assessed from an investor’s perspective?

The aim is to present the respective perspectives against each other and contextualise them for investors. Only the issues that explicitly concern the LFDF are addressed.

The 34-Cent Mark-Up: How Much Money Goes To Insiders?

The central allegation in the article: The LFDF purchased 81% of its properties from five companies that can be attributed to the Galvanovskis family network. Based on 484 transactions in which both the LFDF’s purchase price and the seller’s acquisition price were documented in the land registry, the average mark-up came to 50%.

In relation to total capital deployed, this equates to 34 cents for every euro invested.

Particularly striking is the time factor: The network intermediaries held the properties for an average of 203 days, achieving an annualised return of 96.9%. External sellers, by contrast, held their plots for an average of 4.6 years and achieved a return of only 5.6% per year.

Debitum / LFDF Argumentation

Debitum explained that the prices visible in the land registry reflect only the land value. More specifically the cadastral value, which is set in Latvia for tax purposes and is generally significantly below market value. The actual value of a forested plot, however, consists of two components: the land and the timber standing on it.

The latter is agreed upon separately and is not publicly visible.

As evidence, Debitum published an independent valuation for one of the seven properties listed in the article. The property “Lasi” was assessed at a total market value of EUR 30,000: EUR 8,700 for the land and EUR 21,300 for the timber. Debitum also argues that the LFDF bears the price risk itself, since investors receive a pre-agreed fixed return. Overpriced purchases would thus weigh on the LFDF’s own margin.

Assessment and Evaluation

The argument that timber value accounts for a significant portion of the total price is fundamentally correct and was also mentioned in the article itself as a possible explanation.

The problem, however, lies not in the argument itself but in its application.

1) The valuation covers only one of seven properties within the same purchase contract. Given the price variance within individual contracts documented in the article, a selective individual valuation is of limited representativeness.

2) According to the valuation, JUNO paid the original owner EUR 1,422 for the plot. The land value according to the appraisal was EUR 8,700, while the LFDF paid EUR 17,000. This means that almost double the independently assessed land value was paid for the land alone.

The price differential can be explained by the timber value argument, but without disclosure of the purchase contracts, the allegation cannot be decisively refuted either.

Should a significant portion of the investment sum have already been skimmed off by internal intermediaries before the plots were acquired, this would reduce the effective value of the underlying assets.

The EUR 24.6 Million Gap: Where is the Inventory?

In the unaudited LFDF financial report for 2025, EUR 36.8 million is recorded as inventory under current assets. The article shows that the Latvian land registry for 652 of the 680 LFDF properties records a total purchase price of only EUR 12.2 million. The difference amounts to EUR 24.6 million.

Here too, the purchase contracts for timber values could serve as an explanation. However, intermediary fees, management fees or other compensation paid to network companies could also be a factor.

The LFDF officially employs only four staff and outsources all forestry operations to unnamed “trusted service providers.” Given an internal transaction rate of 81%, it seems likely that these service providers also belong to the same network.

Debitum / LFDF Argumentation

Debitum again refers to the two-part transaction structure: On the one hand the land component, which is reflected in the land registry, and on the other the timber value component, which is agreed separately and is said to account for the majority of the difference.

Upon my enquiry, a detailed breakdown of which share relates to land, timber and other fees could not be provided. The LFDF cites “commercially sensitive” information that it does not wish to make accessible to competitors.

Assessment and Evaluation

The question of asset breakdown is of central importance for investors, as it directly indicates whether the invested capital is fully backed by real assets.

The argument that “commercially sensitive” data cannot be disclosed for competitive reasons is understandable and may indeed be common practice in the forestry sector.

However, this involves capital raised from private investors. The fact that no answer can be provided as to where roughly two-thirds of the reported inventory value comes from is a highly unsatisfactory situation for the affected investors. If a significant portion of the funds went to affiliated companies in the form of fees or margins, this would also reduce the proportion of real underlying collateral accordingly.

Since there is still no detailed breakdown of the inventory position, investors are left with a substantial information gap regarding the actual composition of the assets.

Incorrect Disclosures: 14 Cases under IAS 24

Every company examined within the network has, at least once in its annual reports or prospectuses, failed to disclose or incorrectly reported related parties.

The most prominent example: JUNO shows EUR 5.3 million in receivables from related companies in its own balance sheet, while leaving the related-party disclosure fields empty for eight years. The same pattern applies to BONO with EUR 2.8 million.

The relevant accounting standard is IAS 24, which Latvian accounting law directly references. IAS 24 defines related parties not through ownership thresholds, but through control, significant influence, and close family relationships.

Debitum / LFDF Argumentation

Debitum argues that disclosure obligations only apply in cases of actual ownership control. It cites the AML threshold of 25 percent, which under the EU Anti-Money Laundering Directive (2015/849) is relevant for defining the “beneficial owner”.

Of the 14 disputed cases, two have been explicitly acknowledged. No comment has been made on the remaining twelve.

Assessment and Evaluation

Debitum cites a legal standard that simply does not apply to the issue in question. The AML threshold of 25 percent determines who must be reported as a “beneficial owner” for anti-money laundering purposes. IAS 24, however, the standard relevant for financial statements, does not contain such a percentage threshold.

The internal inconsistencies (receivables from related companies in the balance sheet, empty disclosure fields in the same document) are not a matter of interpretation. Either these positions exist or they do not. The fact that twelve out of fourteen cases were not addressed at all is, in itself, a meaningful non-response.

Security Structure: No Mortgage Over Core Assets?

According to the article, the LFDF prospectus (as well as the Baltic Terra Capital prospectus) shows that the land portfolio is explicitly excluded from investor security. In the event of insolvency, investors would be treated as unsecured creditors with respect to the land.

This means that the primary asset of a forestry fund (the forest land itself) is not pledged as collateral for investors.

Debitum / LFDF Argumentation

Debitum clarifies that the land is indeed part of the security structure but structured differently: Investors reportedly hold a first-ranking pledge over all LFDF assets as a whole, as well as a pledge over LFDF shares.

In addition, the prospectuses contain negative pledge clauses, which prevent LFDF from pledging or disposing of assets without consent.

Individual mortgages on each parcel would not be operationally feasible and would significantly hinder normal business operations (logging and portfolio restructuring).

Assessment and Evaluation

In this area, Debitum presents a convincing argument and also identifies a factual error in the original article, as the negative pledge clause protects investors from voluntary re-encumbrance by LFDF.

However, the key distinction remains: A commercial pledge over the totality of the company’s assets is weaker in the event of insolvency than a real property right over specific plots. The prospectus itself states that investors are regarded as unsecured creditors with respect to the land portfolio in the event of insolvency.

In addition, as of the end of 2024, LFDF reported EUR 5.16 million in liabilities to related family companies. In an insolvency scenario, investors would therefore share the unsecured pool with the very companies that previously earned the markups.

PEP Status: A Gap in the Prospectus

The PEP status (Politically Exposed Person) indicates that an individual, due to their public function, may be exposed to a higher risk of conflicts of interest or misuse and therefore requires enhanced due diligence.

For Debitum, this is relevant because Janis Upenieks, LFDF’s beneficial owner and currently Parliamentary Secretary at the Latvian Ministry of Finance, has held PEP status since 2011.

However, the LFDF prospectus, which lists risks arising from the interests of the beneficial owner (“Beneficiaries Interest Risk”), does not mention anywhere that Janis Upenieks holds a senior government position.

Debitum / LFDF Argumentation

Debitum argues that PEP status in itself does not constitute misconduct and does not automatically indicate a conflict of interest. It is part of internal AML procedures and is not required to be disclosed in the prospectus unless a specific material risk exists.

Assessment and Evaluation

Debitum is correct that PEP status alone does not imply wrongdoing and does not necessarily need to be disclosed in a prospectus. However, the prospectus contains a specific section on “Risks arising from the interests of the beneficial owner”.

The fact that Debitum does not mention that the LFDF beneficial owner is an incumbent State Secretary in the Ministry of Finance appears, at the very least, to be a gap in disclosure. In the context of the relevant risk section, such disclosure would have been appropriate.

Conclusion: Is an Investment Worth It?

The recent reporting on the Latvian Forest Development Fund has raised many legitimate questions about the business model and the connections between the platform and the loan originator.

What conclusions can now be drawn, and to what extent does this affect my personal LFDF investment?

After several statements from Debitum, both public and private, the three core allegations (systematic price markups via related companies, lack of transparency in inventory, and incomplete disclosures in annual reports) have, in my view, not been substantially refuted.

There remains no substantial answer to whether a significant portion of investor capital invested via Debitum has effectively left the collateral perimeter accessible to investors.

It is possible that a significant portion of the price differences can be explained through timber valuation. However, without access to the actual purchase contracts for the timber component and a full breakdown of the inventory, the matter cannot be conclusively assessed.

A final judgment is therefore not possible.

From my perspective, many of the allegations appear justified, as their substance could not be refuted by the responses provided by Debitum.

Does that mean that Debitum is therefore “guilty”? No.

In my view, that is not the case either. Legitimate allegations and proven misconduct are two different levels. The latter would require a full clarification of the matter, which has not been possible yet.

Nevertheless, the discussion shifts the risk assessment of an LFDF investment in a negative direction.

For me personally, it once again highlights that evaluating complex business models, opaque intercompany structures, and industry-specific details exceeds my personal competence. Similar to previous experiences with real-estate-backed crowdfunding platforms (Estateguru, Profitus, Crowdpear, Fintown), I must acknowledge that my expertise in this area is not sufficient.

For this reason, I have decided to let my LFDF investment on Debitum gradually run out for the time being, based on the current information.

If you want to stay up to date, new information and developments regarding LFDF will also be shared in my community channels on Telegram and WhatsApp.

Denny Neidhardt

denny@rethink-p2p.de | Webseite

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.

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