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Changes at CDC

Changes are underway at CDC Capital Partners, the government investment agency for developing countries. The agency is currently looking for someone to fill its top slot, which due to be vacated by Alan Gillespie in November. According to a spokesman CDC is considering both internal and external candidates for Gillespie’s role, after he first indicated his intentions to leave last November. CDC is also putting in place a new fund structure, designed to increase its appeal to private investors. The group will reorganise its large portfolio of investments into a number of more focused funds.

These changes were set in motion in 1997 when the UK government, which set up the Commonwealth Development Corporation 50 years ago to help develop businesses in Africa, Latin America, South Asia and Asia Pacific, announced plans to privatise CDC. The government originally announced that it intended to reduce its interest in the company, which was transformed into a PLC, to about 40 per cent. The proposed public private partnership scheme, which was designed to encourage private sector investment in the company’s activities, was delayed by market conditions and the government’s new plan has not yet been clarified.

Next year CDC will reorganise its activities into specialised funds targeting South Asia, Africa, SMEs and the power industry. This structure was chosen, as there was perceived to be more investor demand for funds focused on specific regions or sectors than a general developing countries fund. The funds for power and SMEs will operate in South Asia, Africa, Latin America and South East Asia. The South Asia, Africa and SME funds will invest in industry sectors such as healthcare, financial institutions, consumer goods such as food and beverages, agribusiness, property, minerals, oil and gas. The firm has already launched CDC Globeleq to manage its $300 million power portfolio.

CDC manages funds of approximately GBP1 billion, three quarters of which came from the government. Its remit is to maximise the long-term growth of private sector businesses in developing countries and mobilise third party capital flow by achieving attractive rates of return. It started raising private sector money in the mid 1990s through a joint venture with Norfund, the Norwegian Investment Fund for Developing Countries. In July CDC’s Aureos Central America Fund held a first closing of $33 million, raised from the International Finance Corporation, the Swiss State Secretariat for Economic Affairs, Norfund and CDC.