CDC of UK to invest $1.3B in Asia over next 4 years

Posted on June 15, 2011 by

Vccircle has recently reported that the CDC, UK’s development finance institute has planned to focus ins new commitments in South Asia and sub-Saharan Africa.
CDC has been so far active as a fund of funds and supported Indian private equity funds.Under the new strategy and direction, it will also look at making direct investments, possibly using debt route as well.

The investment plans include a corpus of $1.3 billion in South Asia by 2015. The target for this fund is the SAARC countries of India, Pakistan, Bangladesh, Sri Lanka, Afghanistan, Nepal and Bhutan. CDC also plans to invest around $2billion in sub-Saharan Africa over the next five years.

CDC has invested more than $1 billion in India so far, making India the single largest investment destination, ahead of even China. CDC’s India investments have been in the funds managed by PE firms like ICICI Ventures, Actis, Avigo Capital Partners, Baring India, IDFC Private Equity, India Value Fund Advisors and Aureos.

The CDC Group was created in 1948 as the Commonwealth Development Corporation in 1948. CDC’s private equity unit was spun out as Actis in 2004. Since then, CDC has worked as a fund-of-funds and is a key sponsor of the funds launched by Actis.

Talking of the future direction, the CDC statement says “CDC will now concentrate exclusively on the low and lower-middle income countries in sub-Saharan Africa and South Asia where 70 per cent of the world’s poor live. In lower-middle income countries, CDC will focus on regions and sectors of need where capital is scarce.” CDC includes India in the list of lower-middle income countries. In India, CDC will not invest in the sectors that attract commercial capital.

The opportunities CDC is looking include one focused on rural businesses and one that targets the country’s eight poorer states. CDC backed funds in India include focused fund managers in areas like microfinance, agri business and renewable energy, including Caspian Advisors’ India Financial Inclusion Fund, Berkeley Energy’s Renewable Energy Asia Fund and Rabo Equity’s India Agri-Business Fund.


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