The future of CDC

Evidence submitted by Stephen Dawson


First my credentials: I have been in venture capital / private equity in the UK for over 30 years (around the start of the industry); the group I used to run (and now chair) has been consistently successful and is currently managing its ninth fund. I have been working on Jacana, tackling poverty in Africa through SME investment, for the last 3 years.

My view is, as stated at the roundtable, that CDC should stick to what it is good at (Fund of Fund equity investment, with a strong African focus and willingness to make SME investments) and not try to "compete" with the other DFIs in their areas of specialisation. Specifically I think it would be foolish, risky, and extremely expensive, to ask CDC to make direct investments: this is a completely different skill and requires a presence on the ground. The one exception to this is co-investment, where a fund-of-funds group like CDC invests alongside (and relies heavily on) a fund manager in whom it has invested and who has a proven track record. This will require some extra people with different skills but can significantly enhance returns.

This does not mean CDC should stay exactly the same: I believe it should be encouraged to make riskier investments by setting differential return targets for its "mainstream" and "innovative" or "frontier" investments.