CDC Group, the UK’s development finance institution, says it has outperformed against all the targets set for the five years to 2008 by the Department for International Development.
CDC Group, the UK’s development finance institution, says it has outperformed against all the targets set for the five years to 2008 by the Department for International Development.
Following CDC’s restructure in 2004, the UK government set rigorous five year targets for CDC’s investments in commercially sustainable businesses in poor countries.
Targets were also set for attracting other investors into those countries by demonstrating financial success.
In the period 2004 to 2008, CDC has invested GBP1.5bn in private sector companies in Africa, Asia and Latin America.
It has outperformed against the MSCI Emerging Markets Index by 134 per cent, representing average returns of 18 per cent per annum.
It has also helped two of its fund managers, Aureos and Actis, attract over GBP2.3bn in third party capital for investment in poor countries, and has generated GBP2.5 billion of portfolio cash for reinvestment in developing economies.
It has committed over GBP2.7bn to funds, predominantly to Africa and Asia.
CDC says 2008 was a record year for its investment in developing markets. A total amount of GBP436m was invested by CDC, with GBP194m going into Africa and GBP230m to Asia.
However, unrealised valuation reductions in CDC’s portfolio led to a decline in net assets of GBP359m in 2008. CDC’s net assets have more than doubled since the beginning of 2004, from GBP1.2bn to over GBP2.3bn.
In January 2009, CDC adopted a new five-year investment policy agreed with its shareholder DFID. CDC will make at least 75 per cent of new investments in low income countries and at least 50 per cent in sub-Saharan Africa. Up to GBP125m can be invested over the period to 2013 in small and medium enterprise funds in other developing countries.
Richard Laing, chief executive of CDC Group (pictured), says: ‘Over the last five years CDC has exceeded all the targets set for it by government. We have grown our assets from GBP1.2bn in 2004 to the present level of GBP2.3bn. During this time CDC has also consistently outperformed its benchmark, the MSCI Emerging Market Index, and has reported average returns of 18 per cent per annum.
‘CDC’s capital is invested in 682 businesses in 75 poor countries and is helping to fuel the long-term economic growth that is the only sustainable route out of poverty. In addition CDC has helped mobilise GBP2.3bn of third-party capital thanks to our investments in funds managed by Actis and Aureos.
‘Inevitably CDC’s results in 2008 reflect the extraordinary turmoil in global capital markets. The upheaval in emerging economies’ stock exchanges and falling company valuations has had an impact on the value of the portfolio. However, CDC is a long term investor and most of the funds that we invest in have a ten year life. We are therefore able to look beyond short term fluctuations in value.
‘Promising businesses in poor countries face a bigger challenge than ever in accessing long term risk capital. CDC’s contribution is essential in these unprecedented times, making the company as vital today as at any point in its 60 year history.’
