Transaction Overview

  • Hancock Renewable Energy Group and Enviva Holdings, LP committed up to $320M for a joint venture, called Wilmington Holdings, to build, own and operate two biomass pellet mills, representing 1 million metric tons of production, and a port terminalling facility in the U.S.
  • The JV may fund an additional biomass pellet mill under development by Enviva on the same terms.
  • Enviva can sell assets from Wilmington Holdings to Enviva’s affiliated Master Limited Partnership (“MLP”), Enviva Partners, LP (NYSE: EVA) under defined conditions.

John Hancock Overview

  • John Hancock is an insurance and financial services firm that is owned by Manulife Financial, one of the largest life insurance and financial services providers in the world with over $560B of AUM.
  • Within John Hancock, Hancock Renewable Energy Group is a division of Hancock Natural Resource Group, which has over $14B AUM and is the largest North American institutional investment platform in forest and agricultural land.
  • The Wilmington Holdings JV provides John Hancock with a platform investment in the biomass pellet sector alongside the leading biomass pellet producer in North America. The JV has diversified and long-term off-take contracts with major European power generation companies for the majority of the production of the JV’s plants.

Enviva Overview

  • Enviva is the largest manufacturer of processed biomass pellet fuel in North America and supplies biomass fuel to utilities and electricity power generators under long-term contracts.
  • With U.S. manufacturing facilities and partner facilities in Florida, Mississippi, North Carolina and Virginia, Enviva has an annual production capacity of over 2.2 million metric tons.
  • The JV also demonstrates a clear path to asset growth in support of Enviva’s MLP, which went public on April 29, 2015. By establishing a JV with the largest institutional owner of timberland in North America, Enviva demonstrated a clear growth story to investors in support of the IPO of Enviva’s MLP.

GCA’S ROLE

  • GCA served as the exclusive financial advisor to John Hancock and helped structure, analyze and negotiate the formation of the JV with Enviva. The Wilmington Holdings investment is the largest investment by Hancock Renewable Energy Group to date.
  • GCA worked side-by-side with the Hancock Renewable Energy team to complete diligence and detailed analysis of Enviva and the JV’s target assets, and to craft a detailed investment approval request for John Hancock’s and Manulife’s internal investment committees.
  • In advising John Hancock, GCA combined our transaction structuring expertise, in-depth experience in the biomass pellet sector and our understanding of the detailed underwriting requirements of large, institutional investors. We also brought to bear a long-standing relationship with Enviva and Enviva’s principal owner, Riverstone Holdings.

WHAT THE TRANSACTION MEANS FOR THE BIOMASS PELLET SECTOR

  • The John Hancock-Enviva JV is the largest private transaction in the sector to date.
  • The transaction provides validation of the supply model of leading North American biomass pellet producers, which provide long-term off-take contracts to large power generation companies in support of renewable, base-load electric power that meets both renewable energy production and greenhouse gas reduction targets.
  • Through investment by a large institutional investor, the JV also establishes biomass pellet infrastructure as a long duration asset with attractive risk-adjusted returns.
  • Through investment by the largest institutional investor in timberland, the JV demonstrates that best-in-class operators can manage fiber supply risk with well-structured contracts, established procurement management and leading standards for sustainably sourcing fiber.