NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, August 25, 2014

Toms is a well known socially responsible business, a shoe manufacturer that donates a pair of shoes to a needy child for every pair it sells. This business model has attracted an unusual investor: Bain Capital.

Toms just announced it would sell half the company to Bain. The deal will give Bain Capital 50 percent ownership, with the other half retained by Toms founder Blake Mycoskie. Toms is worth apparently something like $625 million.

Toms claims to have given away more than 25 million pairs of shoes during the history of its operations. Its eyewear division, according to Bloomberg, “has helped save or restore the sight of more than 250,000 people.” The Bain deal gives Toms capital to support new distribution outlets in Europe and Asia plus more locations in the U.S., along with investment dollars for expanding into new business lines.

This is hardly Bain Capital’s first foray into the world of social enterprise. This past spring, NPQ’s Ruth McCambridge wrote about the Bain Capital-owned CRC Health Group’s buying up of methadone clinics, an investment that generated some controversy concerning the injection of a profit motive into these networks of clinics. Bain Capital also works with a number of nonprofits through the Bain Capital Community Partnership, particularly youth-oriented social enterprise groups such as City Year. Bain Capital is also heavily involved in New Profit and its mission of investing in social enterprises, with three Bain Capital execs on New Profit’s board.