Bain Capital Acquires 50% of TOMS Shoes, Inc.

Bain Capital, one of the largest private equity firms with approximately $75 billion in assets under management (AUM) acquired 50% interest in TOMS Shoes, Inc., a privately held company that donates shoes to children.

Bain Capital’s investment in TOMS Shoes is worth approximately $625 million including debt, according to Bloomberg based on information familiar with the situation.  The source requested anonymity because the companies did not disclose financial terms of the deal to the public.

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TOMS Shoes plans to expand operations

TOMS Shoes plans to use the funds to expand its operations in the United States and other countries. The company’s founder, Blake Mycoskie will retain the remaining 50% based on a statement released yesterday.

According to Mycoskie, “This partnership will enable Toms to grow faster and give to more people in more ways than we could otherwise.”

The investment of Bain Capital will support TOM Shoes’ business expansion in Asia, Europe and United States by increasing the number of its retail stores from its two existing locations in Venice, California and Austin, Texas.

TOMS Shoes is also selling its products online and through different national retailers such Nordstrom, Inc. (NYSE:JWN) and Whole Foods Market, Inc. (NASDAQ:WFM) and through locally-owned boutiques.

Bain Capital to add TOMS Shoes’ product offerings

Ryan Cotton, a principal at Bain Capital, said the private equity firm plans to expand TOMS Shoes product offerings such as apparel and household items.  At present, the company is only offering shoes and eyewear.

“Blake found that a for-profit and a bottom-line focus didn’t have to be in conflict with for-good. That has deep, real resonance with the consumer. Our investment thesis is taking the brand and extending it into a lot of places we’re pretty convinced it has a license to go,” said Cotton.

In 2006, Mycoskie established TOMS Shoes after traveling to Argentina wherein he befriended children in the village he visited. He discovered that the children do not have shoes to protect their feet.

Since its establishment, TOMS Shoes already donated 25 million pairs of new shoes to children in more than 60 countries worldwide. Its eye-wear business already helped restore the sight of 250,000 people.

Retail consultants described the business model of TOMS Shoes as compassionate consumerism.