Filling Stations in IPO Pipeline

In recent weeks we have discussed the impending IPOs of Black Stone Minerals (NYSE: BSM) and Enviva Partners (NYSE: EVA). Our advice was to avoid BSM, which generates revenues primarily via mineral royalties.

Enviva, on the other hand, is the first publicly traded MLP based on the production and sale of wood pellets, and looked more interesting. It is in a fast-growing business, and one that is likely to become increasingly important in the future. I noted last week that “MLP investors who would like to make more investments in renewable energy will find a lot to like here.”

Investors have thus far agreed.

Enviva priced its units at $20, for a projected annualized yield of 8.25%. They opened at $21 and closed the first day of trading at $21.50 for a gain of 7.5%. The price remains right at that level. Black Stone Minerals priced at $19 for a 5.5% yield. Units opened at $19.15, but then closed down nearly 5% from the opening price. As I write this the decline has continued, with BSM trading at $17.51, down nearly 8% from the IPO price.

There is now one more IPO in the works. On April 20 GPM Petroleum (GPMP) filed paperwork with the SEC to raise up to $100 million. GPM Investments (GPM) is the sponsor of this wholesale distributor of motor fuels, which sells them at a fixed fee per gallon to convenience stores and third parties.

As of April 15, GPM controlled over 500 convenience stores selling motor fuel, snacks and other merchandise to motorists in the Mid-Atlantic, Southeastern, Midwestern and Northeastern United States. GPMP is one of the largest independent motor fuel distributors in the United States based on the number of its stores and the largest distributor of Valero-branded motor fuel on the East Coast.

Following the IPO, GPM will purchase the majority of its motor fuel from GPMP. In 2014 GPMP distributed 461.7 million gallons of motor fuel to GPM-controlled convenience stores and 68.7 million gallons of motor fuel to third-party customers. It also received rental income from real estate leased to third parties. The annual volume of motor fuel sold grew from 296 million gallons in 2011 to 450 million gallons in 2014. The increase was primarily a result of convenience store acquisitions by GPM.


Adjusted EBITDA of the partnership’s predecessor increased from $15.3 million in 2013 to $31.6 million in 2014, primarily as a result of acquisitions. Cash available for distribution last year would have totaled approximately $20.8 million.

The initial filing did not specify the projected minimum quarterly distribution, nor projected revenue, profits, or cash available for distribution for the next 12 months. Until these blanks are filled in, it’s impossible to determine the value of this partnership relative to its peers.

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