The funding will allow Arboreal to expand production, improve technical expertise and meet growing regional demand for wood from the construction industry.
Arboreal processes wood sourced from sustainably managed forests to make products such as engineered wood, which has a lower carbon footprint than other construction materials | Arboreal
The International Finance Corporation (IFC) and Amsterdam-based asset manager ILX have put together a $40m (€34m) financing package for Uruguay’s Arboreal, a timber processing firm that uses wood from responsibly-managed forests to produce more sustainable construction materials.
The package consists of a $20m investment from IFC’s own account and an additional $20m mobilised from the ILX Fund.
Arboreal manufactures high-value industrial and construction products, such as visual grade lumber, structural timber, and engineered wood. The Montevideo-based company has Forest Stewardship Council certification based on its ability to trace its wood from forest to final product and ensure it is sourced from sustainably managed forests that include biodiversity conservation.
The funding is expected to help the firm expand production capacity, improve local technical expertise and skills, and meet growing regional demand for construction materials that have a lower environmental footprint.
In particular, the financing is intended to support production of thermally-modified wood, improve circular economy practices such as the use of biomass briquettes, and help make better use of by-products from production processes and other improvements.
Decarbonising value chains
The project is due to be implemented between 2026 and 2028. The IFC said it was expected to contribute to local job creation across the forestry-industrial value chain through a 15% increase in direct employment and the creation of some 185 temporary and indirect jobs in a transport, logistics, maintenance, and harvesting.
Manfred Schepers, CEO of ILX, said the package demonstrated how disciplined sourcing, credible certification, and innovative material choices could deliver climate benefits, while strengthening local value chains and industrial capacity in Uruguay.
“This transaction shows how private capital can support nature‑positive and climate‑aligned industrial growth in emerging markets,” he said.
Manuel Reyes Retana, the IFC’s division director for Argentina, Brazil, Paraguay and Uruguay, said the funding was in line with the multilateral’s policy to support industrial solutions that maximise the value of renewable resources, drive local development, create high quality jobs and contribute to decarbonisation of value chains.
“Arboreal shows how responsibly managed forest resources can be transformed into high value-added solutions with strong development impact,” he said.
Beyond its financing, the IFC is also providing advisory services to support development of the regional market for sustainable construction solutions. This covers demand analysis, regulatory frameworks, and building standards to help scale adoption across Latin America.
Rising demand
The IFC said global demand for sustainable construction materials was growing rapidly in response to stricter standards and more ambitious climate commitments, with the buildings and construction sector across its value chain accounting for around 37% of the world’s carbon emissions.
Wood-based construction solutions are regarded as a key element of this drive, as they enable the use in high-rise and other buildings of engineered wood for structural elements, such as beams, columns, and panels. Engineered wood has a much lower carbon footprint than materials such as concrete and steel.
For ILX, the package is the latest in a growing pipeline of investments alongside development finance institutions from its funds backed by European pensions institutions, as Schepers and ILX CIO Kirstine Damkjær told Impact Investor in February.
In recent weeks, the asset manager has concluded transactions with the African Development Bank for an Egyptian wind farm, and British International Investment in support of an East African financial institution.
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