Paine & Partners Buys Sunrise Growers as It Preps for Next Fund

Paine & Partners, which expects to begin fundraising later this year for its latest pool, has closed another deal.

San Mateo, Calif.-based Paine said yesterday that it invested in SGF Produce Holdings, the parent of Sunrise Growers~Frozsun Foods. Financial terms weren’t announced. Sun Capital Partners was the seller. (The investment came from Sun’s fifth fund, I’m told.) The deal closed Tuesday, says Kevin Schwartz, a Paine founding partner.

Placentia, Calif.-based Sunrise supplies frozen strawberries and other fruits, including blueberries and blackberries, to retail clients. Customers include grocery stores and foodservice companies, Schwartz says. Sunrise’s products are often used to make smoothies and Schwartz hopes to increase the company’s presence in this market. (Smoothie King is a customer.) “We anticipate adding processing capabilities in other fruit categories, including blueberries,” he says.

The Sunrise investment was not an auction. Paine approached the company’s management team “months ago,” Schwartz says. Edward Haft will continue as Sunrise’s president and CEO, along with the rest of company management, a statement says. Schwartz would not disclose whether there would be any job cuts.

Paine’s investment in Sunrise came from its third fund, which raised $1.2 billion in 2007. The majority of Paine & Partners Capital Fund III L. P. is invested, Schwartz says. Paine & Partners is not actively fundraising right now, he says. But the firm expects to begin marketing for Fund IV later this year, Schwartz says. No target has been set, he says.

Paine & Partners, which invests in the food and agribusiness industry globally, typically provides from $25 million to $150 million equity per deal. The PE firm looks to invest in “input” companies that seek to increase productivity in plant and animal production and processing, Schwartz says. Paine is also interested in companies addressing the increased demand for healthier diets, he says.

With this focus, Paine has been active. In September, the firm established Verdesian Life Sciences, which invests in plant health and nutrition, as a platform investment. At that time, Verdesian acquired Biagro Western Sales, which focuses on products and technologies to promote healthier plants and stronger yield crops. Verdesian then acquired Northwest Agricultural Products, a provider of specialty agricultural products, in February. Another Paine company, P&P Water Holdings, in January acquired a majority stake in Eurodrip. Paine, also in February, agreed to sell Adelaide Mushrooms, a South Australian mushroom producer, to Costa Group. Costa Group, a Paine portfolio company, also agreed in February to buy Adelaide Mushrooms, a South Australian mushroom producer.

(Correction: An earlier version of this story said that Paine sold Adelaide Mushrooms to Costa. That is an error and it has been fixed.)

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