Reuters Insider - Investing for Social Returns in India
29/02/2016 13:09
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Source: Thomson Reuters
Description: Wall Street giant KKR is helping Banyan Nation, an
Indian recycling startup, bring more Indians into
the financial fold. Photo/Video: Karan Deep
Singh/The Wall Street Journal
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Transcript (May be auto-generated)
Sunitha is one of 17 workers who recycle plastic here in Southern India. This
facility is run by Banyan Nation, a start-up working to solve India's growing
plastic and waste management problems. They are also trying to give more poor
workers in India access to bank accounts and help in retirement benefits with
the help of Wall Street giant KKR. Sunitha earns $160 each month and has a bank
account. Like her, each Banyan Nation employee gets a minimum wage of more than
$100 per month, well above India's minimum wage requirements of about $70 each
month. Banyan Nation is able to provide this kind of financial support for its
workers after US-based private equity firm KKR helped the company raise more
than $800,000 in investment. They advised Banyan on business plans and offered
their guidance on how to attract outside capital. Two years ago, Kohlberg Kravis
Roberts or KKR, a firm known for hard-nosed Wall Street deal making became
interested in working with Banyan Nation. KKR says it wanted to showcase its
investing acumen by helping social entrepreneurs grow their businesses. The move
helps the firm raise its global profile outside of Wall Street at very low cost
to the company, particularly since it isn't using any of its own capital and
instead raising outside funds. The firm liked Banyan's approach to recycling
which uses discarded plastic to make its own granules. Banyan says its recycled
pellets rival virgin plastic in price and quality and can be used for making
everything from shampoo bottles to auto spare parts. Recycling activities in
India are left or rather conveniently ignored. And left to the domain of the
poor and marginalized. KKR came on board as a mentor end of 2014 and since then
they've been involved very closely in the strategic roadmap of Banyan Nation.
Three years ago, Sunitha worked for less than $58 a month at a portable fan
factory in Hyderabad. She says she was struggling to make ends meet. Since she
joined Banyan Nation, Sunitha is able to provide enough for her family. She says
she is also saving more than $30 each month to fund her son's education in the
coming years. But many workers in India still depend on the informal recycling
sector for a living, often surviving on less than $2 a day. One of them is
40-year old Yadamma who works as a sorter at a plastic warehouse around 20 miles
away from Banyan Nation's facility in Hyderabad. Yadamma has a bank account but
she says she has no money to put in it and can't leave her job because she is
the sole breadwinner. In India, millions of workers still don't have a bank
account and enough wages to support themselves and their families. Like KKR,
other investment firms are also looking to emerging markets in South Asia to
find and support projects that can have an impact beyond just the financial
return. After working as a sorter for two years, Sunitha is now taking on new
responsibilities at the recycling factory