CDC

Document Summary: 

Organizational profile: CDC is the UK's development finance institution, helping to solve the biggest global development challenges by investing patient, flexible capital to support private sector growth and innovation. They focus their investments on businesses in Africa and South Asia. CDC is one of the biggest impact investors in these markets, with a 70-year track record of helping companies to grow in challenging business environments.

The company has investments in over 1,200 businesses in emerging economies with total net assets of £6.5bn and a portfolio of £4.7bn. CDC provides the flexible long-term investment that many businesses in developing countries need to grow. This capital is provided in three broad ways: direct equity, intermediated equity, and debt. They also work in partnership with other development finance institutions and can complement an existing deal. Debt is provided in four ways: project finance, corporate lending, trade finance, and lending to financial institutions. CDC invest through generalist Catalyst Strategies to explore a broad range of investments addressing persistent market failures or building on emerging trends. In 2017 the UK Department for International Development transferred the IMPACT Programme to CDC to be part of CDC’s catalyst strategies. The IMPACT Programme works to catalyse greater and more impactful investment in Sub-Saharan Africa and South Asia.

CDC's  Climate Change Strategy articulates how they will ensure that their activities and portfolio are aligned with the Paris Agreement, to support clean, inclusive and resilient growth in markets. The strategy is also aligned to the pillars of the Task Force on Climate-related Financial Disclosures (TCFD), the main international framework for integrating climate change opportunities and risks into the management systems of financial institutions and businesses. One priority area within the climate change strategy is forestry, within which CDC will target investments to generate negative emissions and increase development impact as part of their commitment to decarbonise their portfolio. They will additionally support agroforestry (silvopasture, tropical tree crops, intercropping).

Financing Instrument: Direct equity, Intermediated equity, and Debt

Project scale: Direct equity investments have ticket sizes from $10 million – $150 million.

Debt, through financial institutions lending, ranges in ticket sizes from $20 million – $100 million.

Intermediated equity, invested in country-focused fund, as well as those operating across Africa and South Asia, ranges in ticket sizes from $5 million – $150 million+.

Recipient countries/ regions/country groups: CDC works across Africa and South Asia.

Recipient categories: CDC invests in private sector companies.

Eligibility Criteria:Each project is assessed by the type of impact the investment is contributing to, linked to the Sustainable Development Goals.

Application guidelines: A prospective deal might be brought to CDC's attention by a sponsor, third party contact, or through direct outreach from CDC. If it is initially seen as viable, the deal team, which includes specialists from the investment and impact teams, conducts further research to decide whether it should be put before the Investment Committee. The deal team works closely with the potential investee to carry out due diligence and deal structuring, examine how the prospective investment meets our criteria, and understand the opportunities for impact. This includes producing an ‘Impact Dashboard’ which articulates the development impact that we expect. It also includes evaluating prospective investees’ environmental, social and governance systems and practices and their commitment to making improvements and adhering to industry good practices. We look for opportunities to maximise impact, with a particular focus on our priorities of gender equality, climate change, job quality, and skills and leadership. The deal team then presents their findings to the Investment Committee. If the Investment Committee makes the decision to go ahead with the investment, CDC outlines their commitment to the deal sponsors and specify any conditions that need to be fulfilled before the funding is made available.

Periodically, CDC opens requests for proposals for investment from the IMPACT Programme. Calls for proposals will be published on their website.

Publication Date
Thursday, 01 April 2021
Applicable location
Africa
Asia
Topic/Theme
Climate change
Database
Financing opportunities