On February 14, 2020, ValueAct filed a passive 13G reporting a 6.3% position. On June 5, 2020 they converted that 13G filing to an active 13D filing and reported ownership of 7.52%. Enviva is now a core position in the Spring Fund.
On May 10, 2018, ValueAct first announced that it acquired a $20 million stake in Enviva Partners LP, making the investment through its ESG-focused ValueAct Spring Fund.
Enviva manufacturers wood pellet plants in the southeastern part of the U.S. from tree farm scraps and pulp mill waste. These pellets are sold to power generators in Europe and Japan as they convert coal plants to biomass. This technology reduces the carbon footprint of these plants by roughly 80%, making it a key part of the decarbonization strategy for utilities. By working closely with the independent stewardship organizations, Enviva helps assure that the tree farms are managed responsibly. The extra income the landowner receives from Enviva helps replace lost business from pulp mills, protecting the land from development.
The company's strategic access to so much forest growth is key to securing a contracted revenue backlog of over $10 billion, with a contract maturity of over 11 years. Enviva has refined its technology to raise the burning temperature of pellets, enabling them to produce more energy. The company has also slashed costs by building facilities close to logging sites where it can collect scraps that sawmills cannot use. Enviva's targeted return is 15%, with a current yield of 7.5% and a growth in distributions of 8%.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio Manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.