Mumbai: DC, the British government’s development finance arm, will invest $680 million in India, as a 7.5% GDP growth forecast for the country makes the environment more conducive for long-term investors. CDC, one of the earliest private equity investors in India, has pumped over $1 billion, directly as well as indirectly, into 325 companies in Asia’s No.3 economy. If the fund finds the right opportunities, it will make multi-million-dollar investments in the next two years, said a top executive of CDC.
The world’s oldest development finance institution is excited about opportunities in the affordable services space and intends to support ventures that will create more jobs and aid in sustainable development, said CDC’s South Asia head N Srinivasan. India is the single largest market in terms of exposure for CDC where it backs domestic-focused private equity funds as well as makes direct equity and debt investments.
About 70% of the $1-billion investment till date has been directed towards private equity funds such as IDFC, Multiple, Actis, Aavishkaar, Rabo Agri Business Fund, Avigo and Baring India, and the balance 30% has been invested in companies including Ratnakar Bank, Rainbow Hospitals, Narayana Hrudayalaya, Janalakshmi Finance and Equitaas.
CDC, which started backing companies directly in 2012, wants to ramp up its direct investments in the country. The areas that attract the fund are infrastructure, industrial, healthcare and financial services. But even within these sectors, it prefers to put money in companies that meet its goal of making a difference to the lower section of the community through increment in employment opportunities, among other things.
“We believe the next unicorns will come from the affordable services space of healthcare, housing and financial inclusion,” said Srinivasan, adding that the sweet spot of investment for CDC is between $25 million and $50 million.
Srinivasan described the exit environment with regard to its private equity funds portfolio as difficult. This is because the performance of such funds’ investments has been mixed. Private equity investments in India touched a record $15 billion in 2015, according to Bloomberg, compared to $8.5 billion in 2014.
UK govt agency CDC to invest $680m in India