Pinnacle is a leader in the production and sale of wood pellets used as fuel in thermal power generation plants.

www.pinnaclepellet.com

Investment

C$71 million

Fund

ONCAP II

Period

May 2011 – Present

ONCAP Team

Gregory Baylin
Adam Shantz

Transaction Summary

ONCAP acquired a majority stake in Pinnacle Renewable Energy Group (“Pinnacle”) in May 2011, with the balance of the equity retained by founding shareholders and senior management.

Business Description

Based in Richmond, British Columbia, Pinnacle is a leader in the production and sale of wood pellets used as fuel in thermal power generation plants in Europe and Asia. Founded in 1989 by Rob and Jim Swaan, the company now operates six wood pellet manufacturing plants and one export shipping terminal in British Columbia and is among the largest North American manufacturers of wood pellets.

Investment Thesis

Pinnacle is one of the largest producers of wood pellets in the world. ONCAP believes there is an opportunity to enhance the company“s market position in this growing industry through organic growth and accretive acquisitions. In particular, ONCAP was attracted to the company’s: (i) strong market position in a growing global market; (ii) highly contracted business model; (iii) blue chip customer base; (iv) robust operating capabilities; (v) proximity to a large fibre basket; and (vi) diversified and flexible production facilities. ONCAP, in partnership with management, aims to create value at Pinnacle by: (i) continuing to grow production capacity through new facility construction, existing facility expansion and acquisitions; (ii) optimizing and building additional redundancy into its logistics chain; (iii) improving fibre security; (iv) enhancing the depth of the management team; and (v) diversifying its customer base and production footprint.