CDC to invest $1b in India via LP, direct commitments
CDC Group, the UK government’s development finance arm, plans to commit $1 billion to India over the next 4-5 years, with nearly half of it coming through direct investment. The projection is in line with a wider adjustment in CDC’s mandate that will see it focus exclusively on South Asia and Africa and also return to direct investment after eight years spent operating on a fund-of-funds basis.
The change in strategy has been anticipated ever since the completion of a government review of CDC's operations.
The group, which has net assets of $2.6 billion, said last summer that direct and debt investments would each account for 20% of its global portfolio by 2015, initially through co-investment and co-lending. It will also focus on building a small number of larger businesses to scale over a 10-year horizon.
"Although CDC has been focused on funds in the recent past, we recognize that the Indian business community requires different capital instruments like debt and quasi-debt as well as equity and long-term tenures beyond the life allowed by PE fund structures, as well as the ability to take higher risks than typical PE firms," Diana Noble, CDC's CEO, told LiveMint.
The group has hired Srinivasan Nagarajan from Actis to serve as Bangalore-based regional director. He will start work in mid-2013. Donald Peck, who used to run CDC's South Asia office, is now chairman of the South Asia investment committee.
Earlier this year the group has recruited Mark Pay, another former Actis executive, to head up its direct investments division. Anubha Shrivastava, who was responsible for CDC's Asia investments, left the group in August.
CDC broke off direct investments as part of a reorganization that led to the spin-out of Actis in 2004. It has made LP commitments totaling at least $1 billion to India-focused managers such as Multiples Alternative Asset Management, New Silk Route, Peepul Capital, Baring Private Equity Partners and India Value Fund Advisors.
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