Indiana Investment Fund looks like winner

BYLINE: By ED SEMMLER, Tribune Business Editor

Talk about a win-win situation.

Pension fund managers for teachers and public employees were looking for a way to get a better return on a small portion of the money they manage.

At the same time, they decided the investment money could be focused on helping businesses in Indiana to expand and prosper.

Thus, one of the newest things in the state's economic toolbox was born -- the Indiana Investment Fund.

Credit Suisse was selected to manage the fund, which now stands at about $155 million.

While already investing about $18.2 million in three Indiana companies, Credit Suisse has focused on traveling around the state to make its presence known to businesses and economic development officials.

On Thursday morning, Project Future, the agency devoted to economic development in St. Joseph County, along with Centerfield Capital Partners of Indianapolis -- which also is handling some of the investment money -- hosted an informational meeting on the new fund for the business community.

The fund was created because both pension funds were not devoting quite enough money to investments other than stocks and bonds, says Curt Rossman of Credit Suisse.

At the same time, it was determined that Indiana was underserved when it came to the private investment money to help businesses grow, make acquisitions or even change hands.

"Indiana was at least $2 billion short over a five-year period compared to the national average," says Rossman.

Pat McMahon, executive director of Project Future, knows that to be true.

"We continuously hear that raising equity dollars is harder in the Midwest than at the coasts," he says.

When there isn't enough collateral in a business for traditional bank financing or other sources aren't available, a privately held business needs to find investors to help them pounce on new market opportunities, acquire a business or finance an expansion.

The Indiana Investment Fund will focus on equity investments of $1 million to $15 million for businesses located in Indiana or interested in setting up an operation in Indiana.

Thomas Hiatt, managing director of Centerfield Capital, explained how his firm helped employees at Bil-Jax in Ohio purchase the business from the former owners. A few years later, the new owners were able to buy out Centerfield.

And David Murphy, the president and chief executive at Better World Books in Mishawaka, described how the rapidly expanding business is now in need of an equity investor to further fuel its growth.

The point is that there are a lot of good small businesses in Indiana and Michigan with the need for mentors and angel investors to get them off the ground, and later for funds such as those managed by Credit Suisse to push them to the next level.

"We expect a return on our investment, but we believe a lot of good will come out of it as well," says Rossman.

Sounds like a great idea.

If our region and Indiana are underserved when it comes to such capital, the Indiana Investment Fund should certainly help grow our businesses.

"It gives us another economic tool," says McMahon. "It should give more businesses an opportunity for capital that wouldn't normally be out there."

Ed Semmler's The Bottom Line column appears on Sundays. If you have a comment or suggestion, contact him at esemmler@sbtinfo.com or at (574) 235-6466.