Fruit and vegetable giant Costa Group sells 50% stake to US private equity firm, as it eyes overseas expansion

The Costa Group, Australia’s number one fruit and vegetable grower and marketer with links to the Geelong Football Club, has sold a 50% stake in the business to US private equity Paine & Partners, as the ambitious company looks to double in size.

The family-owned business traces back to 1888, when Italian immigrant Francesco Costa established the first Costa fruit shop in Geelong.

Its produce is now sold in Woolworths and Coles supermarkets, and its annual revenue for this year is tipped to be more than $600 million.

Employing 4,000 people in low peak and 7,000 in the fruit picking season, its main products are mushrooms, tomatoes, berries, bananas, citrus, grapes and avocados.

Under the deal, Frank Costa – the former president of Geelong Football Club – will remain as chairman and Harry Debney will continue as chief executive. Frank and brother Robert will sit on the board.

Frank Costa says the deal, for an undisclosed sum, offers both “financial resources and the opportunity for management and employers to pursue long-term strategic growth.”

“The interest Paine & Partners has shown by investing directly in our business is also a significant vote of confidence in the way our business is run and its potential for future growth and ongoing success,” Costa says.

Chief executive Harry Debney told The Australian Financial Review that Costa Group is looking at overseas expansion and wants to double the size of the business, as well as extend its growing season.

Debney added that the deal will allow the company to “continue to build on our investments in farming, varietal research, state-of-the-art distribution operations and advanced warehouse technology to supply the exceptional products and services our customers expect from the Costa Group.”

The agribusiness-focused Paine & Partners says the deal, expected to close later this year, will strengthen Costa Group’s balance sheet and provide “significant access to additional capital to facilitate a number of potential growth opportunities.”

“We look forward to supporting Costa’s long-term business goals and working with management to realise its potential to create new market opportunities for the company, its employees and its customers,” Paine & Partners founding partners Kevin Schwartz says.

Paine & Partners’ other agribusiness investments include vegetable and fruit seed giant Seminis, and the America-focused Icicle Seafoods.