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Creation Investments Social Ventures Fund II, LP Announces An Oversubscribed Final Fund Closing of $75 Million

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FOR IMMEDIATE RELEASE

CHICAGO, IL – June 14, 2013 – Creation Investments Social Ventures Fund II, a global private equity fund focused on financial services and microfinance, completed its final closing on May 31, 2013 with total committed capital of $75 million USD.  The Fund was oversubscribed on its target of $60 million USD less than one year from launching, and hit its hard cap of $75 million USD with substantial investor support.

 

Creation Investments Capital Management, LLC, headquartered in Chicago, Illinois, is a leading impact investment fund manager with an overall investor base composed of over 100 US and European institutional and family office investors along with several high net worth individuals.  Over 90% of Fund I investors committed to Fund II, alongside a General Partner commitment of over $7.5 million.

 

To date, the Fund has deployed 35% of its committed capital, making equity investments in three Microfinance Institutions (MFIs) and Small-and-Medium Enterprise Lenders in Latin America and Asia.  Specifically, portfolio holdings include: Grupo Finclusion S.A.P.I. de C.V. SOFOM E.N.R. (Mexico), Sonata Finance Private Limited (India), and Grameen Financial Services Private Limited (India).

 

Each of the Fund’s portfolio companies is committed to providing financial services to under-banked individuals and businesses, helping to facilitate access to capital and economic development. Beyond small business lending, several of the Fund’s portfolio companies offer micro-insurance, micro-savings, money transfer, micro-pension products and other financial services. As of March 31, 2013, the total aggregate loan portfolio is $145 million USD with over 573,000 active borrowers.

 

Creation Investment Social Ventures Fund II seeks to make significant growth equity investments in earlier stage, high potential financial services providers in emerging markets, as well as buyout transactions in more mature MFIs transitioning out of NGO ownership. The Fund Manager seeks to add value and achieve greater scale through active management, in-market consolidation, and expansion of the financial product offering.  The Fund aims to allocate capital in three major geographic regions – Latin America, Asia, and Eastern Europe – resulting in a diverse, global portfolio in core emerging markets.

 

The Creation Investments team, led by Patrick Fisher and Ken Vander Weele, has proven its ability to originate unique impact investment transactions, recruit seasoned management for portfolio companies, access debt capital to fund growth, deliver technical assistance and technology to enhance systems, maintain a focus on responsible investment and client protection principles as a UN PRI signatory and Smart Campaign member, and add value through active involvement in all levels of the business.

 

“We are excited to have attracted a sophisticated set of private sector investors to the global financial inclusion space, providing them with the opportunity to maximize their financial and social returns through impact investments,” said Patrick Fisher, Managing Partner and Founder of Creation Investments.

 

Mayer Brown LLP served as legal advisor and KPMG LLP as tax advisor and auditor.  Silicon Valley Bank supports the Fund and the Fund Manager through its banking, credit and foreign exchange services. The General Partner is comprised of the Creation Investments team and affiliates of Promus Holdings, LLC, a Chicago based multi-family office and alternative assets manager in which Mr. Fisher is also a Partner.

 

About Creation Investments Capital Management, LLC:

Creation Investments is a leading alternative investment management company with a focus on private equity investments in Microfinance, Small-and-Medium Enterprise lenders, Emerging Market Banks, and other Financial Services Providers. Creation Investments sponsors and manages impact investment funds and one-off investments in social ventures, seeking to maximize financial and social returns on investment. For more information, go to: http://creationinvestments.com/

Microfinance Today – a Social Investment

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Laura Hemrika, Corporate Citizenship

31.01.2012
As microfinance continues to grow and the broader field of social entrepreneurship gains increased attention at Credit Suisse and beyond, Rupert Scofield, CEO of microfinance partner FINCA International and experienced social entrepreneur, talks to us about future trends and opportunities in both.

 

One of the earlier and best known examples of social entrepreneurship, microfinance today ensures that millions of people have access to financial services and products. With billions still to reach, this perceived “mature” social investment continues to grow and to adapt its models, its approach and funding to maintain that careful balance of social goals and financial sustainability, in ever-changing environments. Rupert Scofield, cofounder and CEO of microfinance organization FINCA International and an experienced social entrepreneur, gives us insight into how, despite its longer history, a social enterprise like FINCA, and the industry as a whole, continues to meet that challenge. He shares with us the future trends and opportunities in microfinance and social entrepreneurship, and the important roles all stakeholders can play in their successful development.

Laura Hemrika: Microfinance has become a well-known concept, no longer just the realm of development experts. Does this mean your work is done? What lies ahead for microfinance?

Rupert Scofield: While microfinance reaches millions of people, our work is by no means done. We must continue to innovate and broaden client offerings through savings, money transfer and insurance products. We also have work to do to improve transparency and client protection. Partnerships like FINCA’s with Credit Suisse – which is helping us improve market intelligence to better inform decisions about product design – as well as industry-wide initiatives like the Smart Campaign, which is focused on integrating client protection and client-centered services into the core of microfinance operations, are key next steps.

What are some of the challenges in the microfinance industry today and looking forward?

In my opinion, there are a core set of challenges facing the industry – scaling microfinance to reach the three billion people living in poverty; transitioning into and operating regulated deposit-taking financial institutions; remaining sustainable in the face of increasing regulation and government involvement; and the unethical behavior of some Microfinance Institutes (MFIs). With the help of Credit Suisse, we’re addressing the first three of these issues through the FINCA Development Academy, an in-house training institution that will professionalize our workforce in the coming years ensuring that we have the human capacity to surmount the challenges we face.

How do you make sure you are having the desired impact with your work?

I believe that measurement is the key. FINCA was the first international microfinance network to develop a rigorous client assessment tool to evaluate improvements in our clients’ standard of living, and provide information about the need for new products and satisfaction with existing ones. Our Social Performance Audit Committee mandates the measurement of social performance on a regular basis, ensuring that we monitor social performance with the same zeal and precision that we monitor financial performance.

What is the role of commercial capital in microfinance?

Commercial capital must play a significant role in the sector because donor funding alone is insufficient to meet client demand for products and services. To best serve our clients, FINCA – like other microfinance institutions – started by accessing debt from capital markets, developing more and better products over time including the local currency note that Credit Suisse put together for us in 2011. When the mix of grants and debt no longer proved sufficient, we sourced equity capital from socially responsible investors.

We are hearing more and more about “social business” or social entrepreneurship and you’ve just published a book on it. What is it and why is it important?

For me, social entrepreneurship applies effective business practices, emphasizing sustainability and scalability, to address social issues and achieve social change. Social enterprises target market failures that, if not addressed, lead to severe long-term consequences. Social entrepreneurship can create positive social and/or environmental impact through a “double or triple bottom line” approach.

My book, The Social Entrepreneur’s Handbook, constitutes a “call to action” on the part of existing and would-be social entrepreneurs, and tells the inspiring story of FINCA’s transformation from an idea to a global financial services network.

What is the link between microfinance and social entrepreneurship?

Microfinance was the response to a major market failure: the inability of low-income entrepreneurs in developing countries to obtain loans to finance their businesses. Microfinance is a classic example of traditional business practices addressing social issues in a way that is both scalable and sustainable. At FINCA, we now have $500 million in loans-outstanding to over 900,000 low-income micro-entrepreneurs on five continents, and we’ve created over 8,000 jobs.

What are the trends to keep an eye on in social entrepreneurship?

Awareness of, and support for, social entrepreneurship has increased dramatically. More and more universities have academic programs for aspiring social entrepreneurs. In the corporate world, employees and shareholders are demanding accountability for more than financial profits. Social enterprises are cropping up in response to market failures across a wide array of industries and sectors including education, health and the environment.

What sort of challenges is the social business industry facing today and how can we respond? Is there anything that Credit Suisse or Credit Suisse clients could do to help?

From my perspective, social entrepreneurs face several significant challenges. First, a lack of start-up capital; funding is critical for any social enterprise, making the availability of willing investors a necessity. Second, many social entrepreneurs lack business management training which can undermine an otherwise promising idea. Third, the lack of social capital; social enterprises tend to be far more successful when they are part of a larger network. Credit Suisse can continue to play an important role in the investment process and with technical and management training for social entrepreneurs.

How do you see the future of the social business industry?

I am thrilled with how the momentum for transformative social enterprises has increased over the last decade, as organizations create tools and technology to solve social and environmental problems. The issue for the future is that of scale – as the industry grows, social enterprises must create scalable models in order to sustain this momentum. Social enterprise networks will be key for facilitating growth, best practice exchange and resource-sharing.

What roles can banks play in social entrepreneurship?

I think banks can play a key role by providing the tools necessary for success: start-up capital, mobilizing investors, training, technology, and physical capital sharing. By enabling access to capital and sharing knowledge and technology, banks will be making an important investment in the betterment of society, with potential for both social and financial returns.

Credit Suisse and Microfinance
In 2012, Credit Suisse celebrates ten years of engagement in microfinance and continues its mission to provide leadership and develop innovative solutions to link the top with the base of the income pyramid and promote financial inclusion. Today Credit Suisse enjoys an industry-leading franchise in microfinance across the bank.Within the Microfinance Capacity Building Initiative (MCBI), the bank works directly with microfinance networks and MFIs in the field to strengthen management training and development and to drive product and process innovation – enabling the organizations to meet their social and financial goals in an efficient and responsible manner. FINCA has been a partner of the MCBI since 2008 to develop its staff and training academy.

In addition to microfinance, in 2011 Credit Suisse started a number of initiatives focusing on social entrepreneurship in close partnership with the Schwab Foundation for Social Entrepreneurship.