CDC Group Commits $40 Million to Asia Funds

HONG KONG (Reuters) – CDC Group, the British investment agency focusing on private businesses in developing countries, said on Wednesday it has agreed to commit a total of $40 million to two private equity funds in Southeast and Central Asia.

The major investor in many well-known private equity funds, including U.K.’s Actis and China’s CDH, will place $30 million in the Kendall Court Mezzanine (Asia) Bristol Fund and $10 million in Centras Private Equity Fund, CDC said in a statement.

“Although the Asian private equity industry has grown strongly over the past three years, Southeast Asia has seen less of this growth,” Brian Lim, CDC’s portfolio director for Pan-Asia, said in the statement.

“With the growing migration of interest and capital to China and India, funding sources in Southeast Asia have been relatively hard to access, especially by SMEs looking for financing,” he added.

Kendall Court Mezzanine (Asia) Bristol Fund aims to raise $150 million in total for its investments in Southeast Asia, focusing on mezzanine growth capital and buyout capital deals in small- and medium-sized enterprises (SMEs), CDC said.

Kendall Court was founded in 2004 with $90 million in its maiden fund.

Centras Private Equity Fund intends to raise $75 million in total to invest in SMEs in Central Asia, predominantly in the Republic of Kazakhstan, CDC said.

The investment commitments to both Kendall Court and Centras were made in December, CDC said. “Many Central Asian countries have begun to benefit from privatisation programmes, prudent monetary and fiscal polices and more favourable investment climates resulting from legal and regulatory reforms,” said Innes Meek, portfolio director of CDC.

“Despite this there are a very small number of equity players in the region and a lack of finance is a major challenge for SMEs,” Meek said.

CDC is a U.K. government-owned fund of funds with net assets of 2.7 billion pounds ($3.74 billion), and it uses its own balance sheet to invest in private equity funds focused on the emerging markets of South Asia and sub-Saharan Africa.

In November, the British government ordered CDC to increase its investments in the world’s poorest nations.  ($1=.7221 Pound)