Arnold & Porter Assists Grassroots Business Fund Close Groundbreaking Fund for Impact Investing in Emerging Overseas Economies
Washington, D.C., January 17, 2013 - Arnold & Porter LLP recently assisted the Grassroots Business Fund (GBF) in closing a ground-breaking $48,000,000 hybrid equity and debt-funded private investment fund that was formed to assist businesses in emerging markets in Asia, Africa and Latin America, thereby driving local economic development and improving local standards of living, while also offering the potential for a modest return to investors on these investments. GBF is a Washington, DC-based not-for-profit organization, with offices in Lima, Peru, Nairobi, Kenya and New Delhi, India.
During the course of the project, which lasted over a year, from initial discussions with GBF to the final closing of the fund, an Arnold & Porter legal team worked with GBF's grant-based not-for-profit arm to help structure the fund's many complex provisions, including those relating to its governance, and securities and regulatory compliance and also provided counsel on various tax issues. The chief challenge was to create a viable economic and social impact fund model that would not only be able to attract capital from individuals and institutions for investment in high risk businesses, but also to potentially provide a return to investors on those investments, while being socially relevant on a scale never attempted before by GBF.
“It's one of the few private investment funds of its kind in the impact investment space,” said Alycia Kellman, GBF senior counsel. “We set out to create a real commercial fund that could make investments and provide our investors with the potential for financial returns while simultaneously making a positive social impact on local communities. With Arnold & Porter’s help, we are confident we did just that.”
In addition to the private investment fund, Arnold & Porter’s team assisted GBF in structuring a parallel $12,000,000 grant-funded facility, allowing GBF to provide business advisory and support services to the fund’s portfolio companies. According to GBF, early results have indicated that this blending of investment capital with business advisory and support services can successfully help businesses in emerging countries grow and scale, preparing them to engage with the private sector and access long-term commercial financing.
Arnold & Porter counsel David G. Dargatis, along with Aron J. Estaver, led the firm's legal team on the project, which also included Robert E. Holton, James P. Joseph, Cynthia D. Mann, Marian A. Saxena and Andras Kosaras.