Blog

Creation Strives for Good Returns—and a Better World – MiddleMarketGrowth.org

Written by Patrick Fisher January 14, 2015 0 comment

Global

Creation Strives for Good Returns—and a Better World

Small things do add up.

Or so it seems for Patrick Fisher and his growing team at Chicago-based Creation Investments Capital ManagementThe private equity firm aims to marry healthy investor returns with a social impact mission to provide microloans to the working poor.

In countries such as Sri Lanka, Albania and Mexico, Creation is scooping up small private financial services organizations to fill in the gaps where traditional lenders don’t have the inclination to tread— providing needed financing to struggling entrepreneurs.

“Big banks have thought, there’s not a lot of money in making a $100 dollar loan because it costs $20 to $50 to make that loan,” says Fisher, the firm’s 36-year-old founder. “If you do it in a certain model, it’s actually very efficient.”

“Big banks have thought, there’s not a lot of money in making a $100 dollar loan because it costs $20 to $50 to make that loan,” says Fisher, the firm’s 36-year-old founder. “If you do it in a certain model, it’s actually very efficient.”

Creation acquires nongovernmental organizations and charity-owned lenders with solid foundations that lack expertise in back-office systems, human resources and business development.

“There’s a need for investors like us that have the real focus and the next skill set,” he says.

Fisher is a former banker whose passion for emerging markets was fueled by a stint in China for JPMorgan. His co-founder, Ken Vander Weele, had nearly two decades of experience in microfinance when they started the firm in 2007. The Chicago staff has grown to eight; in addition, the firm employs representatives in Eastern Europe, Mexico and India.

Creation’s portfolio companies typically help individuals and small businesses obtain working capital—money for purchases that can make a big difference: a tractor to speed harvest, a motorcycle to deliver goods, sewing machines to mechanize production and the like.

“One of the key things here is that these aren’t consumer loans,” Fisher says. “These are loans to individuals and small businesses that are going right into their business.”

 Besides loans, Creation’s portfolio companies offer services such as remittances, microsavings and microinsurance. They operate on nine platforms, serving some 4.5 million entrepreneurs with roughly $1.1 billion in loans outstanding.

Fisher, whose firm has raised $140 million in equity plus debt funding, says his returns are comparable to those of traditional private equity funds. Despite higher levels of risk, the funds are backed by some heavy-hitting institutional investors that decline to be named, as well as families and family offices. Return on equity at Creation’s companies averages about 20 percent.

And Creation is far from finished. Globally, says Fisher, there are thousands of additional financial services organizations ripe for consolidation and capital injections to get to the next level. The firm is looking primarily at growth in “core emerging markets,” such as Brazil, that have stability and a regulatory regime, he says.

“Charities still need to do the early work,” Fisher says. “After a certain point in time, these things do become very compelling investments.”


Patrick_Fisher

A former banker with JPMorgan, Patrick Fisher founded Creation Investments in 2007. He is responsible for overall management of the firm, including deal generation, due diligence, deal structuring and negotiation, along with fundraising, investor relations and portfolio oversight. His background includes work in international banking and global treasury and trade services.

 

 

http://www.middlemarketgrowth.org/creation-strives-good-returns-better-world/