So it’s $1bn down; $21,699bn to go.
CDC, the UK government-owned private equity fund of funds group which specialises in investing in emerging markets, is putting $1bn to work in an emerging markets infrastructure fund. It will put $750m into a fund managed by Actis – which was spun out of CDC in 2004 – and will seed the fund with $167m of infrastructure assets it already holds, power plants in Tanzania, Kenya, Cote d’Ivoire and Uganda, which have also been managed by Actis since 2003.
Emerging markets infrastructure investing looks set to become a big theme. Morgan Stanley lately predicted that a massive $21.7 trillion is headed for emerging markets over the next 10 years as increasing urbanisation drives demand for assets related to power, electricity, water and transport networks. They see more than half of that total going to China and India.
OK – the chunk of money headed to Africa, south and southeast Asia from CDC is only a tiny fraction of the sums that Morgan Stanley are talking. But it’s notable for the group, which started life in 1948 as the Colonial Development Corporation.
It will be the largest single commitment in its 60-year history. And, with only about £2bn in net assets, it represents a huge bet overall on infrastructure on the part of CDC. Already at the end of 2006, the group had 46 per cent of its investments in infrastructure.
Related links
Private equity in emerging markets: CDC