CDC Group Plc, which is one of the largest investors in India-focused private equity funds, reported $345 million (£223 million) in total return (which includes both realised and unrealised gains) in 2012 as compared to a valuation loss of $112 million (£72 million) in 2011. UK’s development finance institution said the returns were “driven in part by the rise in global markets.” CDC’s total assets went up 8.6 per cent to £2.83 billion in 2012.
India is still CDC’s highest country exposures at 21 per cent followed by China (15 per cent), South Africa (12 per cent) and Nigeria (9 per cent).
But the amount of fresh capital deployed by CDC, both through commitments to private equity funds and direct investments, fell marginally as the firm is building its team to execute its new
New investments by CDC fell from $293 million (£188 million) in 2011 to $273.5 million (£169 million). This capital was invested across nine transactions, which included two investments in India and seven in Africa. The investment in India included $30 million commitment to SME focused fund Ambit Pragma Fund II and $15 million to microfinance-focused fund Aavishkaar Goodwell India.
CDC also recently made $20 million investment in the form of long-term unsecured debt in Jaipur-based AU Financiers, which provides loans for vehicles and SMEs.
In 2011, CDC Group announced a new investment strategy under which it plans to concentrate its new commitments in South Asia and sub-Saharan Africa. The organisation, which has till now acted primarily as a fund of funds, will now also make direct investments and focus on debt. CDC said it will invest up to £800 million ($1.3 billion) in South Asia by 2015.
CDC said in its annual report that the private equity capital pools in these regions are tiny in comparison to developed Western markets. In 2011, for every $1 of private equity capital raised per capita for investment in Africa and $2 for India, $12 was raised for China and $71 was raised for investment in Europe.
Towards this strategy, CDC has added investment professionals in India even as Anubha Shrivastava, the managing director responsible for Asia
investments since 2007, quit in August 2012. CDC added Actis’ Srinivasan Nagarajan as regional director for its investments in India and also roped in private equity veteran Donald Peck as chairman of its South Asia investment committee.
“CDC’s new strategy is focused on making investments to grow businesses and create jobs. By making new commitments and showing a positive return, CDC also demonstrates to other investors that it is possible to invest successfully in some of the harder places in the world where the private sector is weak and jobs are scarce. In 2013, we will build on these achievements as the high calibre team that has been assembled at CDC continues to direct capital to opportunities with strong job creation potential, doing so at no cost to the taxpayer,” said CDC Group CEO Diana Noble.
CDC Group saw its portfolio value go up from £1.91 billion in 2011 to £2.25 billion in 2012. Total underlying investee companies increased from 1,126 in 2011 to 1,250 in 2012.