How KKR helped create jobs for impoverished villagers

October 23, 2013, 8:09 PM UTC

FORTUNE — There has been lots of discussion about how private equity firms do (or don’t) create new jobs, so today it’s worth highlighting an instance in which jobs not only were indisputably created, but the new hires were poor rural villagers. Moreover, the participating private equity firm invested time rather than money.

Here’s the story in a nutshell (pun soon to become apparent):

Soon after Kohlberg Kravis Roberts & Co. (KKR) opened its Singapore office last October, director of Asia public affairs Steve Okun began looking for a local organization with whom the firm could partner on a corporate social responsibility (CSR) effort. So he began holding discussions with Impact Investment Exchange Asia (IIX), a group that focuses on social sector development via investment. But IIX turned Okun down, saying it previously had been burned by investment banks that began projects and then dropped them once a big new banking deal came along (IIX knew of what it spoke, since it was founded by investment bankers).

Okun persisted, and promised that KKR’s involvement would be with members of different offices (Singapore and Australia), and that it would be on nights and weekends (so long as IIX would do the same).

Soon the two groups settled on a project: East Bali Cashews, Bali’s first large-scale cashew processing facility. The company is known for using environmentally-friendly processes and employs around 130 people in the impoverished village of Bon.

What East Bali needed was $900,000 in fresh capital, in order to build a second factory, purchase new machines and hire 100 new workers. But while it knew how to process cashews, it had very little experience raising money.

So three KKR staffers spent months working with the East Bali and IIX teams on identifying needs, writing a business plan and providing general business counsel. It did not, however, directly invest – believing that its highest value would be imparting its knowhow with East Bali Cashew executives so they could more effectively run and grow their business. In the end, the company raised its money – in no small part because it could present a “KKR-vetted” business plan to potential investors.

A sister organization to IIX estimates that for every dollar invested in East Bali Cashew activities this year, the company created an additional 24 cents in social value.

Okun argues that this is the lesson for private equity firms interested in CSR: “Yes, you can go spend the day painting a nursing home. And that’s great. But private equity has unique skills that can be used to provide a base of knowledge that can help a social enterprise, and there is far more long-term value in that.”

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