UK government FoF commits $180m to Latin America

CDC has announced a round of Latin American commitments as it reportedly prepares to launch a $150 million venture fund of funds targeting India.

CDC Group, a UK government-backed fund of fund targeting emerging markets, has committed $180 million (€123 million) to four Latin American private equity funds. 

CDC has invested in the Actis Latin American Private Equity Fund II and Patria’s Brazilian Private Equity Fund III, which both target Brazilian mid-market companies. The firm also made commitments to the Aureos Latin America Fund, a $300 million pan-regional vehicle foccused on small and medium size enterprises, and the Advent Latin American Private Equity Fund IV, which closed on $1.3 billion in July 2007 and will be invested predominantly in Mexico and Brazil. The four funds in total aim to raise $1.5 billion for investment in Latin America, CDC said.

Sven Söderblom, CDC portfolio director for Latin America commented that CDC is attracted to Latin America due to, “increased political stability and prudent macro economic policies which are, in turn, resulting in falling inflation and interest rates”. Söderblom also pointed to a “shortage of funding for small and mid-size enterprises” as additional rationale for investment.

Previous CDC commitments to Latin American private equity funds include $20 million to Nexxus Capital and $5 million each to two additional Aureos funds. The most recent commitments bring CDC’s total investment to date in Latin America to $976 million.

Separately, CDC will launch its first venture capital fund of funds in India next month, according to a report in India’s Economic Times. The newspaper said the vehicle will invest $150 million in information technology, healthcare and pharma funds. The report added that CDC is aiming to launch “at least two or three” venture fund of funds this year.

CDC has assets of more than £2 billion ($3.9 billion, €2.7 billion) and uses its own balance sheet to invest in private equity funds focussed on emerging markets throughout Asia, Africa and Latin America.  The fund currently has $1.8 billion committed to over 40 managers.