Paine Schwartz Partners investment in a merger to create crop genetics and licensing business Bloom Fresh International took place against a backdrop of heightened demand for such companies among institutional and impact investors, chief executive and managing partner Kevin Schwartz told Agri Investor.
Paine Schwartz invested in Special New Fruit Licensing in 2019, which was merged with International Fruit Genetics in August to create Bloom Fresh International. The deal also involved EQT Future and AM FRESH, who now own Bloom Fresh International alongside Paine Schwartz.
The New York-based private equity firm has invested roughly $1 billion since 2003 into companies working to develop elite fruit genetics, said Schwartz.
“We’ve observed there is significantly more interest from institutional capital broadly and impact capital specifically around genetics and the breeding and licensing segment of the food and ag value chain,” he said. “There are a number of other large sources of institutional capital that are canvassing the landscape for these kinds of opportunities.”
Bloom Fresh International will focus on innovations in sustainable growing in areas such as disease resistance, climate variability and water reduction as well as attributes valued by consumers like flavor, health and freshness.
“These companies are ultimately selling proprietary material to producers that improves the efficiency and sustainability of whatever the production system is. They are fundamentally important and good businesses from a business-quality perspective as well,” said Schwartz.
He highlighted Bridgepoint’s April 2021 acquisition of Sun World International as another reflection of growing interest in the genetics market. He added that interest has grown in the time since, driven by a recognition that seeds are among the most important inputs a producer can buy.
Schwartz added that Bloom Fresh International will pursue an expansion plan that will focus first on table grapes before expanding out to other crops.
“Table grapes is a category where you’ve had a relatively small group of companies that have really moved the needle on both agronomic and output characteristics, or the consumer qualities; the taste, the crunch, the brix content, the shelf-life of the product,” he explained. “A large percentage of planted acres are old public varieties, and that allows a significant opportunity for the leaders in proprietary varieties to dramatically expand acres planted in what is also a growing market overall.”
While Paine Schwarz’s 2019 acquisition of a 30 percent stake in SNFL drew from its fifth fund, Schwartz said the firm has continued its activity in the market through investments from its sixth fund, which has already invested in Monterey Mushrooms, a Watsonville, California-headquartered researcher, developer, licensor, grower and marketer of premium mushroom genetics and ingredients.
“Investments in companies like SNFL that increase productivity in agricultural production have become of real interest to impact sources of capital,” said Schwartz.