CDC Group, a fund of funds investor which deploys development capital on behalf of the UK government, posted a loss last year for the first time since 2008.
After a strong 2010 in which it booked a £269 million profit on its investments, performance plunged in 2011 to leave it with a £72 million loss, it said in its annual results. The last time it booked a loss was in 2008, when the figure amounted to £359 million.
Despite the loss, CDC said valuations for companies in its portfolio still outshone the MSCI benchmark by 19 percent last year, and by 25 percent over a rolling five-year basis.
The firm, which has overhauled its strategy to target only investments in managers focusing on the poorest nations, backed 1,126 private sector businesses in 74 developing countries, an increase from the 930 companies it backed in 2010.
Those investee companies employed more people than in previous years. Companies backed by CDC employed 976,000 people last year, up from 796,000 in 2010.
Diana Noble, chief executive of CDC, said in a statement: “Long-term finance is the lifeblood of businesses in developing countries across Africa and South Asia. Without the economic growth that these businesses play a part in generating long-term development and poverty reduction will be undermined.
“I’m pleased that CDC’s capital is reaching more businesses than ever before. Some of these businesses would not exist without CDC’s capital. For others, our investment brings growth, new jobs and improved environmental, social and governance standards,” she added.
The firm made 12 new fund commitments last year, worth a combined £188 million. Six of those were made to first-time managers. Since its restructurig in 2004, it has made 136 commitments, of which 69 were to first-time funds.
“By reaching over a thousand investee companies in 2011 our capital is having a positive impact in some of the hardest places – and all at no cost to the UK taxpayer,” Noble said.
“Whether it’s investing in companies that create hundreds of jobs in the Indian pharmaceutical sector, bring wireless communications to remote villages in Mali, DRC and Togo or support the upgrading of the electricity supply in Cote d’Ivoire, CDC will continue to support the entrepreneurs and ideas that have the biggest development impact, bringing jobs and infrastructure to poor countries,” she added.