Partnership units of Enviva Partners LP (NYSE: EVA) began trading Wednesday morning after pricing at $20 per unit Tuesday, the middle of the expected range of $19 to $21. Enviva raised gross proceeds of $200 million in the initial public offering (IPO) and the underwriters have a 30-day option on another 1.5 million common units.

On the basis of production capacity, Enviva is the world’s largest supplier of utility-grade wood pellets for major electricity power generation companies. The company owns and operates five production plants in the Southeastern U.S. that have a combined wood pellet production capacity of approximately 1.7 million metric tons per year.

According to its Form S-1 filing, demand for utility-grade wood pellets is expected to grow at a compound annual growth rate of about 21% from 2014 to 2020. Growth is being driven by the conversion of coal-fired power generation and combined heat and power plants to co-fired or dedicated biomass-fired plants, principally in Northern Europe and, increasingly, in South Korea and Japan.

Following the IPO ownership of Enviva’s common units will be divided 42% to 58% between public owners and Enviva Holdings LP, the sponsor of the new company. If the underwriters exercise their options the ownership split will be 48.3% public and 51.7% Enviva Holdings.

Enviva said it plans to use the net proceeds from the offering to pay, together with borrowings under its new term loan facility, a distribution to the Sponsor; to repay intercompany indebtedness related to the acquisition of the Cottondale wood pellet production plant; and for general partnership purposes, including future acquisitions. The net proceeds from any exercise of the underwriters’ option to purchase additional common units will be used to pay a distribution to the Enviva Holdings.

With about an hour to go before Wednesday’s closing bell, the partnership units are trading at $21.57, up 7.8% from the IPO price. More than 7 million shares have traded today.

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