Private Equity – Exporting buyouts is Bliss

The UK’s Commonwealth Development Corporation (CDC) is poised to launch an initiative that aims to export buyouts to emerging and pre-emerging markets in its worldwide sphere of influence. The new CDC MBO unit, which is based in London but will liaise with the former development agency’s local teams worldwide, is headed by Jonathan Bliss.

Bliss, on secondment to CDC from 3i since last September, is no stranger to importing private equity concepts into less developed markets. As a veteran of 3i’s Milan office, he ranks as one of the pioneers of Anglo-Saxon’ deal structures in the Italian market which, until relatively recent times, was notably immature relative to the country’s industrial base.

The new unit will, however, venture into more exotic territories. It is conceivable, Bliss ventures, that certain Eastern European markets might attract CDC’s attention. “Our real universe,” Bliss says, “will be the Latin American, Caribbean, Sub-Saharan African and Asian emerging or pre-emerging markets” – a focus in line with CDC’s current spheres of interest.

CDC currently deploys between $200 million and

$300 million (euros 198 million to euros 297 million) per annum. Bliss predicts that, given stability in the important Latin American and South East Asian markets, the MBO unit could soon put some $50 million to work funding buyouts and buy-ins, focusing primarily on transactions valued at up to $10 million. The boundaries, however, are elastic and, in major privatisations, CDC would be prepared to commit perhaps as much as $50 million in a single investment.

Currently there are around 20 buyout or buy-in investments in the CDC portfolio. Some of these have been groundbreaking deals, among them Vascal Bebibas, the first conventional buyout ever seen in Bolivia, which CDC closed slightly more than a year ago. But what are the real prospects for deal flow, in view of the immaturity of the MBO unit’s target markets? Alex Hambly says that sales from within the existing CDC universe of companies could form an important source.