In AgroFresh, CEO Clint Lewis is leading a public company that has a private equity partner.
'It's a unique dynamic," Lewis says.
Private equity firm Paine Schwartz Partners is one of the company's key investors, and in that respect, Lewis says he sees them as a strong strategic partner.
"Obviously, like any investor, they want to ensure the right financial return," he says. "But more specifically than just the pure play financial return mechanics, very much strategically focused around the trends impacting ag. Their network is broad globally across the ag complex and so they've been very complementary to take — again, AgroFresh is a public company — but also to be able to leverage their network, their contacts and expertise to help us continue to drive value."
As a public company, AgroFresh has access to public capital but also has the pressures of the regulations and the oversight. Additionally, a private equity partner has an exit window. To balance those two interests and timelines, Lewis says it's about positioning the company for consistent, profitable growth, which connects the dots across all of their investors, shareholders and stakeholders. It's also about operating with integrity — doing the right things all the time.
"If we do that consistently, both our long-term and maybe more shorter-term threshold investors will all win," he says.
As the company looks to either raise additional capital or build cap stacks for growth is in part about creating a compelling, investable story for additional shareholders.
"We believe we have really good margins — we're a cash-generated business. We're a leader in our space at a time where the very nature of our business around sustainability, preserving food, minimizing food waste, are all strong themes that are going to be tailwinds over the foreseeable future. And so our ability to continue to responsibly drive our internal organic growth engine is going to continue to generate the capital that can be deployed in many different ways but also create the attractive incentives for future investors to come and be involved in the business."
Lewis adds that the company continues to be flexible and creative in terms of how it deals with its capital structure and how the team positions the company for future and consistent growth.
Looking at the macro trends that underpin agriculture, there's expected population growth going from 7 billion to 9 billion people across the globe between now and 2050. And the segment of the population that's going to be growing the fastest is the middle class across also the emerging markets as increasing GDP increases earning power. As that happens, Lewis expects they're also going to demand better food in their diet, which will likely mean fresh produce will be a major staple of that diet.
"And then if we think about, from a broader environmental standpoint, less arable land for farming, less water, the challenge around climate, all of those should be a wellspring for innovation, for technology, and for a company like AgroFresh that's focused on R&D internally develop new novel innovative solutions to address the needs of our customers and various stakeholders, but also how those trends will continue to expand creates a lot of opportunities not only for internal activity but also inorganic growth opportunities through licensing, various partnerships, joint ventures and M&A."
Lewis spoke at last year's Philadelphia Smart Business Dealmakers Conference about AgroFresh's unique investor situation as well as how the macro environment might affect the company. Hit play above to catch the full conversation.