Commonwealth Development Corporation
Encyclopedia
The Commonwealth Development Corporation, now known as CDC Group plc, (formerly the Colonial Development Corporation) is a British development organisation owned by the UK Government. CDC is a fund of funds
, with net assets
of US$4bn, and uses its own balance sheet
to invest in private equity fund
s focused on the emerging markets
of Asia, Africa and Latin America
, with particular emphasis on South Asia
and sub-Saharan Africa
. The Shareholder Executive
is responsible for CDC, on behalf of the Department for International Development
.
The original Colonial Development Corporation was established in 1948 by Clement Attlee
's post-war Labour government, to assist Commonwealth countries in the development of agriculture. It was renamed the Commonwealth Development Corporation in 1963.
In July 2004 CDC spun out an emerging markets private equity investment platform, Actis Capital. CDC remains an active sponsor of Actis
's investment activities, committing the equivalent of 650 million U.S. dollars to the firm's third fund.. Since its reorganisation in 2004 the taxpayer-owned organisation has grown in value from £1 billion to £2.8 billion and now invests in almost 1000 businesses in 70 developing countries. The businesses in which CDC invests employ almost a million people and pay over US$3 billion a year in taxes.
CDC has been the subject of extensive investigations by the magazine Private Eye
, which devoted seven pages to criticising the organisation in September 2010. Amongst other allegations, Private Eye claims that CDC has moved away from financing beneficial international development towards seeking large profits from schemes that enrich CDC's managers while bringing little or no benefit to the poor; and that when Actis was spun out it was given an "implausibly low valuation". The Actis deal has also been the subject of criticism by British politicians.
On 12 October 2010, the Secretary of State for International Development
, Andrew Mitchell
announced to Parliament that the British Government will reconfigure CDC, saying that whilst he applauded its financial success, it had also "become less directly engaged in serving the needs of development". On 22 October 2010 the International Development Committee
announced that it is to conduct an inquiry into CDC to examine issues such as its effectiveness and possible reforms, including its abolition. A Report was ppublished on 03 March, 2011 with the government's response delivered on 18 May, 2011.
Fund of funds
A "fund of funds" is an investment strategy of holding a portfolio of other investment funds rather than investing directly in shares, bonds or other securities. This type of investing is often referred to as multi-manager investment...
, with net assets
Net assets
Net assets, sometimes referred to as net worth, is the shareholders' equity = assets minus liabilities. The term net assets is commonly used with charities or not for profit entities -- a measurement of their ability to reinvest profits toward their mission....
of US$4bn, and uses its own balance sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...
to invest in private equity fund
Private equity fund
A private equity fund is a collective investment scheme used for making investments in various equity securities according to one of the investment strategies associated with private equity....
s focused on the emerging markets
Emerging markets
Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. Based on data from 2006, there are around 28 emerging markets in the world . The economies of China and India are considered to be the largest...
of Asia, Africa and Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
, with particular emphasis on South Asia
South Asia
South Asia, also known as Southern Asia, is the southern region of the Asian continent, which comprises the sub-Himalayan countries and, for some authorities , also includes the adjoining countries to the west and the east...
and sub-Saharan Africa
Sub-Saharan Africa
Sub-Saharan Africa as a geographical term refers to the area of the African continent which lies south of the Sahara. A political definition of Sub-Saharan Africa, instead, covers all African countries which are fully or partially located south of the Sahara...
. The Shareholder Executive
Shareholder executive
The Shareholder Executive is the body within the British Government responsible for managing the government's financial interest in a range of public companies. Originally established within the Cabinet Office, it has since 2004 been part of the Department for Business...
is responsible for CDC, on behalf of the Department for International Development
Department for International Development
The Department For International Development is a United Kingdom government department with a Cabinet Minister in charge. It was separated from the Foreign and Commonwealth Office in 1997. The goal of the department is "to promote sustainable development and eliminate world poverty". The current...
.
The original Colonial Development Corporation was established in 1948 by Clement Attlee
Clement Attlee
Clement Richard Attlee, 1st Earl Attlee, KG, OM, CH, PC, FRS was a British Labour politician who served as the Prime Minister of the United Kingdom from 1945 to 1951, and as the Leader of the Labour Party from 1935 to 1955...
's post-war Labour government, to assist Commonwealth countries in the development of agriculture. It was renamed the Commonwealth Development Corporation in 1963.
In July 2004 CDC spun out an emerging markets private equity investment platform, Actis Capital. CDC remains an active sponsor of Actis
Actis
In Greek mythology, Actis was one of the Heliadae, a son of Rhodos and Helios. Actis, along with his brothers, Triopas, Macar and Candalus, were jealous of a fifth brother, Tenages's, skill at science. They killed him and Actis escaped to Egypt. According to Diodorus Siculus, Actis built the city...
's investment activities, committing the equivalent of 650 million U.S. dollars to the firm's third fund.. Since its reorganisation in 2004 the taxpayer-owned organisation has grown in value from £1 billion to £2.8 billion and now invests in almost 1000 businesses in 70 developing countries. The businesses in which CDC invests employ almost a million people and pay over US$3 billion a year in taxes.
CDC has been the subject of extensive investigations by the magazine Private Eye
Private Eye
Private Eye is a fortnightly British satirical and current affairs magazine, edited by Ian Hislop.Since its first publication in 1961, Private Eye has been a prominent critic and lampooner of public figures and entities that it deemed guilty of any of the sins of incompetence, inefficiency,...
, which devoted seven pages to criticising the organisation in September 2010. Amongst other allegations, Private Eye claims that CDC has moved away from financing beneficial international development towards seeking large profits from schemes that enrich CDC's managers while bringing little or no benefit to the poor; and that when Actis was spun out it was given an "implausibly low valuation". The Actis deal has also been the subject of criticism by British politicians.
On 12 October 2010, the Secretary of State for International Development
Secretary of State for International Development
In the United Kingdom, the Secretary of State for International Development is a Cabinet minister responsible for the Department for International Development and for promoting development overseas, particularly in the third world...
, Andrew Mitchell
Andrew Mitchell
The Right Honourable Andrew John Bower Mitchell MP is a British Conservative Party politician and the Member of Parliament for Sutton Coldfield...
announced to Parliament that the British Government will reconfigure CDC, saying that whilst he applauded its financial success, it had also "become less directly engaged in serving the needs of development". On 22 October 2010 the International Development Committee
International Development Committee
The International Development Select Committee is a select committee of the House of Commons in the Parliament of the United Kingdom. The remit of the Committee is to examine the expenditure, administration and policy of the Department for International Development and its associated public...
announced that it is to conduct an inquiry into CDC to examine issues such as its effectiveness and possible reforms, including its abolition. A Report was ppublished on 03 March, 2011 with the government's response delivered on 18 May, 2011.