Due diligence for export-oriented renewable fuel producer


A private equity firm faced an opportunity to invest in a Canadian-based manufacturer of wood pellets, focused on oceanborne exports to European electric utilities. We were asked to focus, in particular, on issues related to rail transportation from the forest to the port, the determinants of ocean transportation costs, the economics of competing producers and the outlook for regulations promoting the use of wood pellets as renewable resources.


  • Research: Conducted extensive primary research with North American railroads, export terminal operators, forest product ship operators, European utilities and worldwide competing sources of renewable fuel.
  • Analysis: Assessed upside opportunities and downside risks for our private equity client.
  • Recommendations: Provided our views on the opportunity, as input to the purchase offer.


  • Our findings raised significant questions regarding risks well beyond the control of company management, in particular regarding ocean freight rates, alternative sources of supply and evolving regulatory views of wood pellets as a sustainable fuel source.
  • The client tempered its offer accordingly and ultimately did not make the investment.