Eric Dillon, the founder of Silver Creek, sees a huge opportunity in European credit as banks shed loans.
From his office on the top floor of Rainier Tower in Seattle, Silver Creek Capital founder and Chief Investment Officer Eric Dillon can see the result of one of his notable investments in full panorama. Construction cranes, steel beams, and new buildings are everywhere, many of them related to local e-commerce giant Amazon.com. “It may soon occupy a quarter of downtown Seattle’s premium real estate,” says Dillon, who was a founding investor in the online book-retailer-turned-technology-behemoth.
These days, however, he isn’t interested in seeding the next Amazon.com (ticker: AMZN) or getting in on a hot tech initial public offering. “We favor illiquidity, activism, and complexity,” says the 58-year-old Dillon. “This is where the real inefficiencies lie.” Though the $7 billion firm he founded in 1999 manages roughly 30 funds of funds covering many facets of alternative investing, its calling card is private credit.
At the moment, Dillon’s particularly interested in this asset class—which is essentially privately placed debt that isn’t securitized and sold in the public market—in Europe, where banks own more than 60% of available credit, roughly twice the share of bank ownership in the U.S. As European regulators demand new and more-stringent capital requirements, however, banks will be looking to unload their nonperforming loans. “There are going to be tremendous dislocations in Europe as the banking community shrinks its share of the credit market,” Dillon says. “That’s where we start.”