IPO Report: Enviva Partners, LP (EVA)

Francis Gaskins |


Enviva Partners, LP (EVA) is the world’s largest supplier by production capacity of utility-grade wood pellets to major power generators.

Four other companies are scheduled for the week of April 27. The full IPO calendar is available at IPO Premium.

The manager and joint-managers are Barclays, Goldman Sachs, RBC Capital Markets, Citigroup
The co-managers are J.P. Morgan, Raymond James, MUFG, U.S. Capital Advisors. 

SEC filings

EVA is based in Bethesda, MD andscheduled a $200 million IPO on NYSE. The market capitalization is  $238 million at a price range midpoint of $20. The IPO is scheduled for Wednesday, April 29, 2015.

Enviva Partners, LP Overview

Since EVA’s entry into this business in 2010, EVA has executed multiple long-term, take-or-pay off-take contracts with creditworthy customers and have built and acquired the production and terminaling capacity necessary to serve them.

Enviva Partners, LP Valuation


Per share dilution








Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Enviva Partners, LP (EVA)








Enviva Partners, LP Conclusion

Neutral plus

Expected CAGR of market is 21%

Expects to pay 8.5% for March '16yr

Top line rev +6.1%

Gross margin 10%

Pre-tax income 4.7%

Price-to-bk of .8, Price-to-tangible bk of 2.1

Selling 84% on the IPO

Enviva Partners, LP Business

EVA is the world’s largest supplier by production capacity of utility-grade wood pellets to major power generators.

Since EVA’s entry into this business in 2010, EVA has executed multiple long-term, take-or-pay off-take contracts with creditworthy customers and have built and acquired the production and terminaling capacity necessary to serve them.

EVA is larger than any of its competitors and its existing production constitutes approximately 15% of current global utility-grade wood pellet supply.

Enviva Partners, LP Five Production Plants

EVA owns and operates five production plants in the Southeastern U.S. that have a combined wood pellet production capacity of approximately 1.7 million metric tons per year (“MTPY”).

Two of EVA’s production plants are new facilities that EVA constructed using its templated design and standardized equipment.

A third plant, EVA’s largest in terms of production capacity, has been in operation since 2008.

EVA also owns a dry-bulk, deep-water marine terminal at the Port of Chesapeake (the “Chesapeake terminal”) that reduces its storage and shiploading costs and enables EVA to reliably supply EVA’s customers.

All of EVA’s facilities are located in geographic regions with low input costs and favorable transportation logistics.

Owning these cost-advantaged, fully-contracted assets in a rapidly expanding industry provides EVA with a platform to generate stable and growing cash flows that should enable EVA to increase EVA’s per-unit cash distributions over time, which is its primary business objective.

Enviva Partners, LP Demand

Demand for utility-grade wood pellets is expected to grow at a compound annual growth rate (“CAGR”) of approximately 21% from 2014 to 2020, according to Hawkins Wright.

This growth is being driven by the conversion of coal-fired power generation and combined heat and power plants to co-fired or dedicated biomass-fired plants, principally in Northern Europe and, increasingly, in South Korea and Japan.

These conversions are attractive due to a combination of factors: they enable power generators to profitably extend the permitted lives of plants that provide critical baseload power generation; they help countries meet regulations regarding greenhouse gas (“GHG”) emissions and renewable energy usage; and they can be implemented quickly and cost-effectively relative to other sources of renewable energy.

Enviva Partners, LP Intellectual Property


Enviva Partners, LP Competition

EVA competes with other utility-grade wood pellet producers for long-term, take-or-pay off-take contracts with major power generation customers.

Competition in EVA’s industry revolves around the price, quality and consistency of the wood pellets produced, the reliability of wood pellet deliveries and the producer’s ability to verify and document, through customer and third-party audits, that its wood pellets meet the regulatory sustainability obligations of a particular customer.

Most of the world’s current wood pellet production plants are owned by small, private companies, with few companies owning or operating multiple plants.

Few companies have the scale, technical expertise or commercial infrastructure necessary to supply utility-grade wood pellets under large, long-term off-take contracts with power generators.

EVA is the largest producer by production capacity, and consider the other companies in this group to be its competitors.

Approximately 60% of the world’s utility-grade wood pellet production capacity is located in North America.

Other current producers of utility-grade wood pellets in North America include Fram Renewable Fuels, LLC, which is owned by an individual investor, Georgia Biomass, LLC, a plant owned by RWE Innogy, Rentech, Inc. and its subsidiary New England Wood Pellets and German Pellets, which is owned by Europe’s largest pellet producer, German Pellets GmbH.

Enviva Partners, LP 5% Shareholders Pre-IPO

Enviva MLP Holdco, 58%

Enviva Partners, LP Dividends

Upon completion of this offering, EVA’s partnership agreement will provide for a minimum quarterly distribution of $0.4125 per unit for each whole quarter, or $1.65 per unit on an annualized basis.

The payment of the full minimum quarterly distribution on all of the common units and subordinated units to be outstanding after completion of this offering would require EVA to have cash available for distribution of $9.8 million per quarter, or $39.3 million per year.

Enviva Partners, LP Use of Proceeds

EVA expects to receive $185 million from its IPO and use it for the following:

repay $81.9 million of intercompany indebtedness related to the acquisition of EVA’s Cottondale plant and that EVA will assume in connection with its sponsor’s contribution of its interests in Enviva Pellets Cottondale, LLC and retain $45 million for general partnership purposes, including future acquisitions.

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