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CDC Group commits USD40m to Indian fund focussing on developing SMEs

CDC Group, the UK government-backed private equity emerging markets fund of funds investor, is committing USD40m to the Kotak India Private Equity Fund, which invests in sustainable sma

CDC Group, the UK government-backed private equity emerging markets fund of funds investor, is committing USD40m to the Kotak India Private Equity Fund, which invests in sustainable small and medium-sized enterprises.

The fund is for international investors and will co-invest with a domestic investor fund, Kotak India Growth Fund II, which closed in March 2008 having raised USD440m.

Anubha Shrivastava, CDC’s managing director for Asia, says: ‘The Kotak fund fits CDC’s South Asia investment criteria. Kotak has demonstrated its ability to support and develop early and growth stage companies in India.

‘Its experienced and well regarded investment team has an excellent understanding of the local market and, despite the impact of the global liquidity crisis, will continue to encourage economic growth in the region.

‘While India’s short-term growth is expected to slow, new private equity investment will further develop the emerging private sector and foster the next generation of successful enterprises in India.’

The investment complements other funds in CDC’s India portfolio. CDC has backed a number of Indian fund managers including Actis, Barings, ICICI and IDFC PE. CDC’s investments in India now total over USD200m.

Kotak India Private Equity Fund is the second fund to be managed by Kotak Private Equity Group and sponsored by Kotak Mahindra Group. The target size of the fund is USD200m with a hard cap of USD250m.

The fund will take minority stakes investing between USD15m and USD40m in SMEs in India and will focus on key themes of domestic consumption and consumer spending, infrastructure and infrastructure-led services.

CDC is a government-owned fund of funds with net assets of GBP2.7bn that uses its own balance sheet to invest in private equity funds focused on the emerging markets of south Asia and sub-Saharan Africa. CDC’s mission is to generate wealth by providing capital for investment in sustainable and responsibly managed private sector businesses.

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