Key Takeaways
- • Paine Schwartz Partners, which manages approximately $6.5 billion in AUM, published its inaugural white paper, "Investing in Real Assets with a Private Equity Approach: How Food and Agribusiness Investments Can Deliver the Best of Both Worlds," available for download on its website.
- • The firm contends that private equity returns can be achieved with a real-asset risk profile by selecting the right business models and combining strategies from both asset classes.
- • Paine Schwartz argues that owning the real asset is not required; companies with look-through exposure to real assets may offer higher returns with similar dynamics.
- • Hybrid structures, operational improvements, moderate leverage, value-add strategies and sector diversification are identified as key mechanisms for balancing risk and return.
- • Case studies from the firm's portfolio, including Costa Group, AgroFresh and BLOOM FRESH, are cited as evidence, with the firm stating that direct and indirect food and agribusiness exposures have produced returns comparable to traditional private equity.
Summary
Paine Schwartz Partners, described by the firm as the largest private equity firm dedicated to sustainable food chain investing, has published its inaugural white paper, according to a PR Newswire release dated February 26, 2025. The paper, titled "Investing in Real Assets with a Private Equity Approach: How Food and Agribusiness Investments Can Deliver the Best of Both Worlds," examines whether investors can capture private equity-style returns with the more limited downside and steadier returns typically associated with real assets.
Chief Executive Officer Kevin Schwartz said the firm explores "the possibility of bridging the gap" between these dynamics, noting that food and agribusiness, an sector in which Paine Schwartz has invested for more than 20 years, "encompasses many real assets and private equity characteristics." The paper draws on case studies from across the firm's portfolio to assess this intersection.
According to the white paper's key takeaways, Paine Schwartz believes that achieving private equity returns with a real-asset risk profile is feasible through careful selection of business models and strategies that combine the strengths of both asset classes. The firm also argues that direct ownership of the underlying real asset is not necessary, as investments in adjacent companies with look-through exposure to real assets may offer higher returns while retaining similar dynamics.
The paper identifies hybrid investment structures, operational improvements, moderate leverage, value-add strategies and sector diversification as key mechanisms for achieving this balance. While the firm acknowledges that challenges remain, it states that a well-executed strategy offers the potential for higher returns with a more manageable risk profile.
Paine Schwartz says its experience shows that investments in companies with direct and indirect food and agribusiness exposure have produced returns comparable to traditional private equity, citing operational efficiencies, new market entry and technological adoption as drivers. Real-world examples in the paper include Costa Group, AgroFresh and BLOOM FRESH. The firm makes primarily control buyouts, with a smaller allocation to growth companies, and targets productivity and sustainability and health and wellness themes.
Chief Executive Officer Kevin Schwartz said the firm explores "the possibility of bridging the gap" between these dynamics, noting that food and agribusiness, an sector in which Paine Schwartz has invested for more than 20 years, "encompasses many real assets and private equity characteristics." The paper draws on case studies from across the firm's portfolio to assess this intersection.
According to the white paper's key takeaways, Paine Schwartz believes that achieving private equity returns with a real-asset risk profile is feasible through careful selection of business models and strategies that combine the strengths of both asset classes. The firm also argues that direct ownership of the underlying real asset is not necessary, as investments in adjacent companies with look-through exposure to real assets may offer higher returns while retaining similar dynamics.
The paper identifies hybrid investment structures, operational improvements, moderate leverage, value-add strategies and sector diversification as key mechanisms for achieving this balance. While the firm acknowledges that challenges remain, it states that a well-executed strategy offers the potential for higher returns with a more manageable risk profile.
Paine Schwartz says its experience shows that investments in companies with direct and indirect food and agribusiness exposure have produced returns comparable to traditional private equity, citing operational efficiencies, new market entry and technological adoption as drivers. Real-world examples in the paper include Costa Group, AgroFresh and BLOOM FRESH. The firm makes primarily control buyouts, with a smaller allocation to growth companies, and targets productivity and sustainability and health and wellness themes.
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