Ara Partners acquires Genera Energy, pumps $200M in expansion

Cumberland Gap, it’s a devil of a gap
That’s what the scouts all tell ya
Sure ‘nuf it may get tough
If it doesn’t kill ya, kill ya
Kentucky, she’s a-waitin’ on the other side
David Rawlings, “Cumberland Gap”

News has arrived from Houston that Ara Partners, regularly seen around the halls of ABLC and known as a private equity firm specializing in industrial decarbonization investments, has acquired Genera Energy. Genera, in latter days, has emerged as a top manufacturer of non-wood agricultural pulp and molded fiber products. Genera’s previous owners – WindSail Capital Group, Coppermine Capital and Stairway Capital – will retain a minority interest in the company. 

Genera’s Vonore, Tennessee production facility is the largest vertically integrated non-wood agricultural pulp and molded fiber manufacturing facility operating in North America today. It supplies customers with domestically sourced and manufactured non-wood pulp and molded fiber products. 

It’s an expansion capital moment of the first magnitude. Ara committed up to $200 million more, to support significant expansion of its sustainable pulp and packaging business. Those funds will develop additional integrated manufacturing facilities and expand molded fiber production capacity in Vonore, enabling production of more than 5,000,000 take out containers, plates, bowls, and other food and consumer packaging products every day, all made entirely from locally grown fiber crops and agricultural residues. 

Reaction from the stakeholders

“There is an urgent need for solutions to the mounting global single-use plastics pollution problem that is driving insatiable demand for domestically sourced molded fiber products,” said Kelly Tiller, Genera’s CEO. “We are proud to partner with Ara, and appreciate their passionate support of our mission and their wealth of experience in scaling manufacturing operations and building sustainable businesses.” 

“The Genera team has the operational experience, strategic relationships, and drive to build the leading sustainable packaging platform in North America,” said Troy Thacker, Managing Partner at Ara Partners. “We have been incredibly impressed with the team’s depth of knowledge in biomass and molded fiber, as well as the immense customer interest it has garnered across foodservice, consumer packaging and medical applications. We are thrilled to partner with Kelly and her team to drive this next phase of growth.” 

The long and winding Genera road

Genera’s been on a journey that exemplifies the bioeconomy, the twists and turns, the disappointments, the perseverance, the pivots, the imagination. Above all, the feedstock. For Genera is grounded in it — the North Star in Genera’s journey has been switchgrass and other feedstocks purpose-grown on the lands around Vonore, Tennessee. 

Back when, i think we all expected they would supply feedstock to the cellulosic ethanol sector. Certainly when we profiled them with a 5-Minute Guide in 2012 we highlighted a portfolio of clean energy projects that included:

• Contracting with farmers to produce 6,000 acres of switchgrass on privately owned farms in East Tennessee.
• Construction and operation of a demonstration-scale cellulosic ethanol biorefinery in Vonore, Tennessee. The biorefinery is operated in conjunction with DuPont Danisco Cellulosic Ethanol.
• Construction and operation of Tennessee’s Biomass Innovation Park, a research, demonstration and development campus in Vonore, Tennessee that focuses on purpose-grown energy crops and integrates the entire biomass supply chain in one location. The Biomass Innovation Park includes harvesting, handling, storage, densification, transportation, pre-processing and conversion.
• Partnership with an energy crop seed company.
• Establishment and management of the Tennessee Biomass Supply Cooperative, a new generation farmers’ cooperative.

DuPont bought Danisco, then bailed on cellulosic when the company was split into three entities. 

Genera had amazing assets, though. They had the Biomass Innovation Park, integrating and optimizing the entire biomass supply chain in one location, spanning from the field gate to the biorefinery gate, including biomass receiving, handling, convergence, storage, pre-processing and densification. 

They had signature research partnerships with John Deere, Vermeer, AGCO, Case New Holland, Oak Ridge National Laboratory, US Department of Energy, US Department of Agriculture, and University of Tennessee. 

They just needed a new application. The company pivoted into sustainable packaging, which the world really needs, and the rest has been history.

Blazing the trail across the mountains

Commercialization and that first killer application, that’s like the Blue Ridge Mountains that American settlers stared at for more than 150 years before they learned how to cross the Cumberland Gap. Everyone suspected that something as fertile and beautiful as Tennessee might be waiting on the other side. Someone had to be the first to find the way through the range. Many were lost, trying. It was a devil of a Gap, I tell you.

Likewise, brilliant people at bioeconomy companies had looks on their faces back in 2015 like farmers out of the Dust Bowl period, wondering where the next disastrous windstorm might come from. In time, applications like sustainable packaging, renewable diesel and RNG came along to top off the baseload demand provided by ethanol and biodiesel. The industry stalled in the early 2010s not for the lack of ambition or technology — it was finding applications for which the technology could produce a product at a market price. 

You see, it’s not a valley of death that biomass innovators face. Would that it was. It’s a fearsome, twisting mountain range of death. Climb the tough ridge, see the zillion ridges ahead of you, like the folding maze of the Great Smokies. Filled with blind alleys and box canyons, gaps that are not found, foul weather, steep climbs beyond the power of pack animals or wagons, downhill stretches that send careless pioneers cartwheeling to their death. 

If I had to pick one stretch of America that personifies the advanced bioeconomy, I’m sure I’d vote for Cumberland Gap, at the junction of Virginia, Tennessee and Kentucky.

In old times, the struggle to find and survive the Gap and exploit the fertile land beyond was home to all the heartbreak, selfishness, selflessness, innovation, confusion, collaboration, yearning, theft, wonder, joy, bullying, independence, insight, nonsense, ambition and achievement that you might recognize as “the American Grain”.

if you grew up on tales of Dan’l Boone kilin’ b’ar and blazin’ trails, this is the path through the wild Appalachians where he stood on Pinnacle Rock and looked down on Tennessee.  But if he saw farther than the rest, it was by ‘standing on the shoulders of Giants’, as Isaac Newton put it. In the particular case of Boone, he followed Thomas Walker, who got it from the Cherokee. They had been following the Wilderness Road since time out of mind. The Cherokee got it from the bison, more or less. 

It was the bison who worked it out, though they couldn’t have bragged on it. Even if they could speak, they probably would have told you they were just looking for a way from southwest Virginia to the Kentucky’s bluegrass prairie, home of a very nutritious, tasty grass that puts up with the close grazing that bison are known for. Establishing a pathway upon which a civilization and culture would be built, that was not on their agenda. 

The rise of the feedstock-rich Southeast

For that reason, I’ll speculate that Genera hasn’t been trying to re-shape the world economy these past years all by its onesey. They’ve been trying to find a way out of the box canyon that DuPont and others dumped them in when some of the usual suspects announced “just kidding” a few years back and folded the tent on their cellulosic ethanol ambitions. 

Genera’s found more than survival. They kill’d a few b’ar and blazed a trail for others to follow.

You could draw a line alongside US Interstate 40 from the coast of North Carolina to northern Texas, and there and south of that line find that business has doubled, tripled, quadrupled in the advanced bioeconomy. A while back, you might find pellet mills. 

Now, there are the likes of USA BioEnergy in Texas, Velocys in Mississippi, LanzaJet and LanzaTech in Georgia, a SAF nexus in the Carolina Lowcountry. On Digest CONNECT this past week we highlighted the opportunities in the seven counties of the SouthernCarolina Alliance. Louisiana seems to be home to more renewable diesel projects than shrimp. 

That the land south and west of the Cumberland Gap is frothy with opportunity — so long expected, so long delayed? It’s fittin’, as they used to say in places where Americans did the warsh, where a dresser was a bu’ruh and a sofa was a dav’nport.

The Backwoods Years

Though the bioeconomy exists everywhere that stuff grows, its path to scale resembles nothing so much as the intemperate, grasping and fecund years around the American Revolution, the era of the Appalachian backwoods. No more than 48,000 people served in the Rebel Army at any one moment in the Revolutionary War, out of a population of three millions. George Washington may have been first in the hearts of his countrymen later on, but in February 1778 he had a grip on just 8,000 regulars at Valley Forge. Underfunded, hungry, disdained, inconvenient, indefatigable, they changed the world.

As David Rawlings observed in his tuneful “Cumberland Gap” duet with Gillian Welch, “If it doesn’t kill ya, kill ya, Kentucky she’s a waiting on the other side. Give you the fever, put the daylight in your eyes.”

Turns out, the path through the Gap did not kill Genera. Surely, now, after years of switchgrass fever, you kin’ see the daylight in their eyes.