Inside Paine Schwartz’s vegetable seed production platform

Paine Schwartz partner Angelos Dassios says Verisem will look to acquire peers as it seeks to fill a niche overlooked by investors.

Last month, Paine Schwartz Partners combined three companies to create Verisem, a global platform devoted to vegetable seed production.

Partner Angelos Dassios explained to Agri Investor that the firm’s interest in vegetable seeds stretches back to investments made in 2003, when members of the Paine Schwartz team were investing as part of a predecessor firm.

In the years since, he said, while seed development, crop protection and other agricultural inputs have attracted significant private equity investment, actual seed production has remained an overlooked part of the agricultural value chain. As a result, he said, vegetable seed production is currently carried out either by large seed companies that keep production in-house or by a fragmented industry made up of family-owned companies focused on niche markets.

“Seed production is a complex and critically important step in the overall seed value chain,” Dassios said. “We created Verisem as an independent platform to focus on that important step with the goal of creating the unassailable global leader in seed production.”

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In creating Verisem, Paine has started by bringing together three seed production companies, each with a focus on the production of seeds for particular vegetables in specific geographic regions, Dassios said.

Paine Schwartz acquired Suba Seeds in October 2015. The company, based in Longiano, Italy, specializes in the production of seeds for chicory, coriander, carrots and a variety of other crops. Brotherton Seed Company, headquartered in Moses Lake, Washington, which focuses on pea and bean seed production for the food-processing market, was bought by Suba Seeds last year. Lastly, Condor Seed Production, based in Yuma, Arizona and purchased by Suba in 2014, specializes in onion, artichoke and asparagus seeds.

“When you put these businesses together, there’s a real revenue synergy of being able to offer your customers more seed varieties and a greater diversity of production locations. We really do have core competency in a broader set of crops than any one of these companies might have individually,” Dassios said, adding that the combined platform maintains production expertise across seeds for more than 2,000 varieties of more than 90 crop types.

On the hunt

Dassios said that Verisem contracts about 1,800 growers around the world to produce vegetable seeds. The company’s role is in cleaning the seeds, testing them for germination rates and ensuring their quality, with revenue coming from both selling seed directly to farmers and pursuing opportunities for contract seed production.

“There might be a large multinational that owns genetics and they want to produce seed. They will work with us on a contract basis to grow that seed and they will be their own sales and marketing engines to actually distribute the seeds,” he said.

Paine Schwartz plans to pursue acquisitions that expand the scope of the Verisem platform in terms of both crops and geography, according to Dassios. The firm is open to deals in which the firm purchases a “significant” portion of a business, the owners of which are then invited to convert part of their existing ownership into an equity position within Verisem.

“I view it as global,” he said.  “If there are opportunities in different hemispheres, if there are opportunities around the globe that make sense to be part of the Verisem family, we’re open for business.”