DC pension backs Paine Fund VI with $100m

The New York-headquartered agribusiness firm will target 20-25 percent gross IRR through a mixture of control and growth equity investments from the fund.

The District of Columbia Retirement Board has committed $100 million to Paine Schwartz Food Chain Fund VI, according to a mid-November meeting.

According to minutes from the meeting posted last month, the $9.5 billion pension made the commitment in late October. The investment drew from the natural resources portion of DCRB’s portfolio, which is currently valued at $202 million, includes an investment with Homestead Capital and constitutes 2.2 percent of the overall portfolio.

New York-headquartered Paine Schwartz Partners had raised at least $615 million for Fund VI as of the late-September commitment of $150 million from the Connecticut Investment Advisory Council.

According to a presentation given to Connecticut, Fund VI has a target of $1.5 billion, a $2 billion hard-cap, management fees of 2 percent and an 8 percent preferred return. Its investment period will last five years from final closing, and target gross IRRs of between 20 and 25 percent through investments of between $50 million and $500 million.

Sub-sectors of particular focus for the fund include crop productivity, controlled environment ag, ingredients, software and value-add processing, among others. Paine expects buyout investments to constitute a majority of the fund’s investments, which will also include up to 25 percent non-control growth equity investments. Geographically, Paine Schwartz plans to focus 70 percent of Fund VI investments on North America and the remainder across Western Europe, New Zealand and Australia.

“The Fund will typically seek to invest in platforms during their growth phase with the expectation they will become larger and more mature portfolio investment companies on exit, attracting a broad range of strategic and financial buyers,” Connecticut staff wrote. “Historically, exits have tiled towards strategic agribusiness buyers and to a much lesser extent the IPO market.”

Also among investors in Fund VI is the Rhode Island State Investment Authority, which committed $30 million to the vehicle in June. According to materials presented then by Rhode Island consultants Cliffwater, Paine plans to support up to 12 portfolio companies under core themes of productivity and sustainability with capital from the fund.

Paine drew from its $1.45 billion Fund V for its June 2020 investment of $150 million of preferred equity into Agro Fresh, a Nasdaq-listed company offering products to extend shelf-life of produce, in exchange for convertible stock equivalent to 36 percent of outstanding shares in the company. Last month, Philadelphia-headquartered AgroFresh announced an agreement to merge with funds managed by Paine Schwartz acquiring all the outstanding common stock of the company for $3 per share.

In late October, Paine-backed organic, non-GMO cold-pressed juice provider Suja Life acquired Vive Organic, a California-based company offering organic juices and juice shorts, for an undisclosed sum.

Paine Schwartz managed $3.2 billion as of December 2021, according to a March filing.