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The Secretary of State for International Development (Hilary Benn): On 27 November 2002, the then Secretary of State for International Development made a written statement to the House on the plans to reorganise CDC. This set out how CDC was to be reorganised into two separate organisations; an investment company and a new management company. I am now submitting a further written statement to inform the House on how these plans are being carried through.

The purpose of the reorganisation of CDC is to maximise the creation and long-term growth of viable businesses in poorer developing countries, by making responsible investments and mobilising private capital alongside public funds. These objectives, which were set out in the 1997 and 2000 White Papers on International Development, remain unchanged.

CDC's business now focuses on regions (South Asia and sub-Saharan Africa) and sectors where more investment is needed in order to help meet the Millennium Development Goals. It follows a set of pioneering responsible business principles that commit it to ethical, environmental and social best practice. CDC is also subject to an Investment Policy, which sets out the countries (the "CDC Universe") in which it may invest. The Policy includes two targets; that 70 per cent. of new CDC investment should be made in poorer developing countries, and that 50 per cent. of new investments should be in sub-Saharan Africa and South Asia.

In order to improve CDC's performance and enhance the mobilisation of private investment in poorer developing countries, I have recently approved a reorganisation proposal on behalf of the Government.

CDC is to be separated into two corporate entities and a family of Funds.

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Firstly, an investment company, which will continue to be named CDC and will be wholly-owned by the Government, will hold the existing and future cash and investment assets of CDC and its subsidiaries. This company will be responsible for ensuring that our capital is used in accordance with the investment policy. Secondly, a new independent management company, to be known as Actis, will be formed as a limited liability partnership between its management and staff (who will together have majority control) and the Government. Actis will raise and invest capital from CDC, from other development finance institutions and from private investors. It will follow responsible business principles and provide leadership and supervision for a family of Funds,

The Funds will focus on Africa, South Asia, power, and SMEs, with smaller funds for China and Malaysia. Each will be managed by a dedicated fund management subsidiary of Actis or on a joint venture basis, and will be run on a commercial basis in order to attract capital from private investors and development finance institutions. This structure of a management company and a family of Funds is an accepted norm in the international fund management industry. It will allow Actis to manage Funds with a range of objectives, from

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strongly developmental to fully commercial, according to the requirements of target markets and the objectives and return requirements of investors including CDC.

This dual company approach will help to establish Actis as an independent investment manager specialising in developing country markets, especially the poorer ones. It will also enable CDC, after an initial five year contract with Actis, to select its future investment manager(s) and thereby strengthen CDC's and the Government's ability to hold Actis and any other investment managers to their targets.

I have agreed to the appointment of Malcolm Williamson as Chair of the Board of the new CDC. He has an admirable track record in the banking and financial sector and I expect that he will take up this new position within the next few weeks when the two new companies are formally established. The current Chair of CDC, Lord Cairns, has agreed to become Chair of Actis. I am very pleased that two such experienced and highly qualified professionals will be leading the new companies.

I am writing to the Chair and members of the Select Committee on International Development about these changes. Later today, I will be making a public announcement about the new arrangements.