FoA 385: The Private Equity Playbook with Kevin Schwartz of Paine Schwartz Partners

Put AI to work on your farm: https://farmwave.io/

Paine Schwartz Partners: https://paineschwartz.com/

Today’s episode features Kevin Schwartz of Paine Schwartz Partners. This is a really interesting look at the food and ag industry from a totally different perspective. Kevin and his team are investors, but they’re not trying to invest in early stage startups like a venture capitalist would, or into farmland like other investors might. They focus on companies that already have proven their product, but for one reason or another might be looking to sell or take on an investor. 

Paine Schwartz Partners focuses their investing in these companies into two general categories: productivity - which includes seed and other inputs and technologies that help farmers and ranchers produce more efficiently and profitably. You’ll hear Kevin use the word “upstream” a lot, and he means upstream in the value chain, so these types of companies/products and services. Then their second area of investing is further downstream into more food companies, specifically those associated with health and wellness. 

I enjoyed the chance to ask Kevin about the evolution of private equity investing in food and agriculture and their approach from investment thesis development to research and due diligence to value creation strategy to portfolio construction. We also talk about the rise of environmental, social and governance ortherwise known as ESG and impact investing as well as how interest rates impact these companies and PSP’s ability to carry out their strategies. A lot of interesting stuff here that I’m learning for the first time, so I love episodes like this. 

If you’re an ag nerd but not a finance nerd, there might be a few terms that are foreign to you. I won’t do a full glossary here, but I encourage you to pause and look them up if needed, but stay to the end, because I think there’s some real insight in this episode.

A quick bio on Kevin before we dive in: Kevin Schwartz has been an investor in the food and agribusiness industry for more than two decades. Today he leads Paine Schwartz Partners as Chief Executive Officer and Managing Partner. 

Raised in the town of Moline on the border of Illinois and Iowa, his great grandparents were subsistence farmers in Iowa and his grandfathe, uncle and father all worked at John Deere. 

Kevin began his career at Goldman Sachs in the late-1990s, and then moved into private equity working for two organizations, Fremont Partners and American Industrial Partners, before coming to the firm which at that time was called Fox-Paine in 2001.