Beyond Capital Fund and O’Melveny & Myers Enable Social Impact Investment in IndiaMarch 25, 2014 Los Angeles and Silicon Valley -- March 25, 2014 -- Beyond Capital Fund (“BCF”), a public charity that promotes economic development in impoverished communities through investment in the water, waste and sanitation, healthcare, and energy sectors, completed a compulsory convertible debenture investment into Frontier Markets (“FM”) in November 2013 with the aid of pro bono legal counsel from O’Melveny & Myers LLP. O’Melveny’s legal expertise, due diligence, and deal structuring services enabled Beyond Capital Fund, Rianta Capital, and IIX Asia to facilitate a US$150,000 seed investment into FM.
FM is a last-mile sales and distribution company that offers clean energy products and superior after-sales service to low-income, base of the pyramid (“BOP”) households in rural India. FM targets consumers who have limited access to electricity, reside in rural and semi-urban settings, and are considered low-income. These consumers are often farmers or laborers, and many of them are microfinance clients.
To reach these customers, FM builds service centers, partners with local channels to gain in-depth access to target households, and creates village-level branded franchises that sell clean energy products with ongoing customer service to BOP families. FM differentiates itself by providing after-sales servicing and by maintaining an ongoing relationship with customers to develop trust within the community. FM’s founder, Ajaita Shah, was recently named one of Forbes Magazine’s “Top 30 Under 30” Social Entrepreneurs.
The capital raised by Frontier Markets is in the form of compulsorily convertible debentures. This capital will enable FM to impact more than 100,000 families by providing them with safe, clean, and economic energy products, allowing them to save up to US$100 annually on energy costs.
BCF was introduced to FM through the Echoing Green Fellowship and followed the company for several months during 2011 before deciding to invest. BCF led the investment into Frontier Markets including the due diligence and structuring and of the deal terms aided by O’Melveny and J Sagar Associates, a leading national law firm in India comprising over 270 lawyers and consultants, including 70 partners with offices in New Delhi, Gurgaon, Mumbai, Bangalore and Hyderabad.
“At Beyond Capital Fund, we believe we have backed a strong management team and unique business model that will generate solid financial and social returns over time,” said Eva Yazhari, Chief Executive Officer of Beyond Capital Fund.
Beyond Capital Fund and O’Melveny established a relationship in 2012 in an effort to provide social businesses with top-tier legal counsel and contribute to a high standard of legal due diligence throughout Beyond Capital Fund’s investment process. Beyond Capital Fund’s legal relationships play a crucial role in the organization’s investment decision-making process, which also includes a due diligence committee, investment committee, board of directors, and advisors.
FM was appealing to O’Melveny because of the firm’s long and distinguished record of community involvement. Each year, O’Melveny provides tens of thousands of hours to handle pro bono legal aid matters and court-appointed cases; and supports, with time and money, a variety of cultural, advocacy, and recreational programs that benefit those most in need.
O’Melveny’s partnership with Beyond Capital Fund allows the firm to further its community involvement in emerging markets, provide support to early-stage social businesses, and aid in the professionalization of due diligence within the impact investment sector.
About O’Melveny & Myers LLP
With approximately 800 lawyers in 16 offices worldwide, O'Melveny & Myers LLP helps industry leaders across a broad array of sectors manage the complex challenges of succeeding in the global economy. We are a values-driven law firm, guided by the principles of excellence, leadership, and citizenship. Our commitment to these values is reflected in our dedication to improving access to justice through pro bono work and championing initiatives that increase the diversity of the legal profession. For more information, please visit www.omm.com.
About Beyond Capital Fund
Beyond Capital Fund is a nonprofit organization that uses a business approach to make social impact investments that improve the lives of people living below the poverty line, typically those earning less than $4 a day. The organization’s focus is on funding early-stage businesses in the water, energy and healthcare sectors. For more information, visit www.beyondcapitalfund.org.
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