CDC float could value firm at £2 billion(2)

The UK government is reportedly planning a sale or flotation of CDC, the emerging markets fund of funds that recently revealed bumper profits.

CDC, the government-backed emerging market fund of funds, is reportedly considering a sale or flotation that could valued the business at more than £2 billion ($3.94 billion, €3 billion). 

The UK-based Times newspaper reports that CDC has recently hired US investment bank Morgan Stanley to evaluate its strategic options, with a flotation the preferred outcome at this stage.

The valuation is based on CDC’s net assets, which increased by 23 percent to £2 billion as a result of substantial valuation gains, according to its financial report. The group made £375 million profit, which it recycled into new investments in poor countries.

According to The Times, the UK Government has not drawn a dividend from CDC in more than ten years.

The value of CDC’s portfolio in Africa rose by 17 percent last yearto £392 million and in Asia by 14 percent to £257 million.

Gordon Brown has publicly announced plans to raise billions of pounds by selling off part of the Government’s £337 billion of assets. 

When Clare Short, the former development minister, tried to sell CDC in 1997 the move was criticised by MPs, aid organisations and environmental groups due to the group’s succesful reputation in building up emerging markets untouched by other firms.

CDC has since split into two firms, spinning off its private equity arm Actis, and changing its own strategy to become a fund of funds.

CDC’s chief executive Richard Laing told PEO that it was too early to leap to any conclusions. “The only factual part of the article was that we’ve appointed Morgan Stanley.” The rest was pure speculation, he said.