Private Equity in Developing Countries

							Better Returns in a Better World
The Role of Institutional Investors in Private Equity Investing in
Developing Countries



On 27 January 2010, CDC, Oxfam and The Church of England kindly
invited a group of expert investors – institutional investors and Private
Equity (PE) investors- to the sixth Better Returns in a Better World
workshop, which took place at Lambeth Palace in London. The roundtable
is part of a wider Oxfam project called Better Returns in a Better World.1

The roundtable debated the role of institutional investors when investing
in Private Equity (PE) funds that invest in developing countries. The
discussion built on the learning from the experiences of institutional
investors, particularly CDC, the UK’s Development Financial Institution
(DFI) which has a long record investing in developing countries, as well as
from PE fund managers Actis and Aureos. To enrich and frame the
discussion CDC and Actis have written the following succinct paper that
summarises CDC experiences in Sub-Saharan Africa, and Actis learning
from their operations in India.

For an explanation of the workshop’s objectives and the specific questions
discussed, and to read the findings of the roundtable, please see the
Briefing     Note       prepared      for     the      workshop         at:
http://www.oxfam.org.uk/resources/issues/privatesector/business.html



1. CDC’s work to promote responsible investment and business practices2

Poor management by businesses of the environment, social matters and governance
(ESG) is common in the developing markets of low-income countries. Weak laws
ineffectively enforced, a culture of corruption and lax corporate governance
standards mean that businesses need not necessarily be driven to protect their
environment from the external effects of their activities nor their workers or affected
communities from unacceptable risk.



1
  For more information on the project please see
http://www.oxfam.org.uk/resources/issues/privatesector/investment.html
2
  The following section has been written by CDC and the views express are those of CDC and not
necessarily those of Oxfam, Actis, or the Church of England Ethical Investment Advisory Group.


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CDC has always linked its capital for investment in businesses in poor countries to a
commitment by its fund managers and their portfolio companies to adhere to
responsible business practices with respect to ESG and to work over time to improve
performance towards international standards. CDC’s new Investment Code on ESG
updates CDC’s previous standards in line with lessons learned and development of
international best practices and became effective on 1 January 2009. The Investment
Code sets out CDC’s principles, objectives, policies and management systems for
responsible investment with respect to ESG. The Investment Code builds on and
incorporates international best practice standards, including those developed by the
IFC, the ILO and the OECD, and includes an exclusion list which specifies
businesses and activities in which CDC will not invest for ethical reasons.

The fund managers that invest CDC’s capital commit to implement CDC’s Investment
Code for responsible investment practices. With this commitment, CDC and its fund
managers seek to enforce minimum standards and to build awareness among
portfolio companies of how proper attention to reduce waste, pollution and energy
consumption as well as adequate safeguards for the wellbeing of employees and the
communities affected by business activities can be key levers for business success.
In the medium to long term, CDC has ample examples of how such responsible
business practices can attract international customers, reduce risks, build stronger
brands, and often also reduce costs. The promotion of good business practices in
poor countries by CDC and its fund managers is a key aspect to how CDC’s
investments contribute to development.

The core principle of CDC’s Investment Code is that businesses in which CDC’s
capital is invested should work on improving their practices on ESG in line with
international good practice over the duration of the investment by CDC’s fund
managers, and for their continued business operations after an investment is sold.
While business standards may be weak at the time when an investment is made,
CDC’s fund managers work with portfolio companies to improve business operations
and practices from the ESG perspective during their investment period.


   Example of the business case for ESG improvements:
   Shelys Pharmaceuticals, Tanzania
  CDC invested in Shelys through its fund manager Aureos. Following Aureos’ advice,
  the company has obtained World Health Organisation Good Manufacturing Practises
  (WHO GMP) certification although this is not mandatory for a pharmaceuticals
  company in Tanzania. Moreover, although Tanzania has no formal codified
  environmental requirements for the pharmaceutical sector, Shelys has worked to
  ensure that WHO standards on effluent discharge are met as well. The effect of
  obtaining such certification for the company has
  been pronounced. Shelys’ improved production
  standards have allowed its products access to
  eight countries across Central and Eastern Africa.

  Moreover, when Aureos decided to sell Shelys it
  was able to do so for a premium price. Shelys
  leading position in East Africa, coupled with
  improvements in manufacturing standards and
  improved corporate governance, persuaded Aspen
  Pharmacare, Africa’s largest pharmaceutical manufacturer to acquire a majority
  stake in Shelys as part of its African expansion strategy. The sale generated an IRR
  of 22.9% on Aureos’ initial investment of US$4m.




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2.1 Assessing risks and addressing ESG issues over time

CDC works with its fund managers to ensure that they pay sufficient attention to ESG
matters throughout their investment activities. As CDC’s fund managers are long
term investors, they are particularly well equipped to bring about improvements in
corporate ESG practices over time. This is particularly important for fund managers
that invest in sectors with significant risks. Responsible investors like CDC have a
key role investing in high-risk sectors to bring about better business practices in their
portfolio companies, which helps to promote better standards overall in poor
countries.

Industries with especially high ESG risks include:

   • highly polluting industries, such as large factories, oil and gas extraction and
     refineries;
   • activities which affect the natural environment, for example mining, large scale
     agribusiness, forestry, and construction of new infrastructure;
   • resource intensive industries, including cement plants and aluminium smelters;
   • businesses which use low skilled workers such as textile production, mining,
     agribusiness and forestry, in countries with weak employment legislation;
   • businesses which involves workers handling hazardous substances, for
     example mining, agribusiness and chemical factories;
   • businesses which can pose health and safety dangers for consumers, such as
     pharmaceuticals and food producers; and
   • businesses which deals with large contracts in sectors and countries that are
     prone to bribery, including construction, extractive industries and other public
     procurement contracts.

Environmental and social risks are typically lower for investments in financial
institutions, media, information and communications technologies or retail.

From the business integrity and corporate governance perspectives, risks and
opportunities for improvements could cut across most sectors. Corrupt practices are
more common in sectors that involve large contracts, not least with governments.
Improvements in corporate governance are often called for in companies that have
grown quickly whilst still being managed by the founder or an extended family without
an independent board and key professional functions such as a qualified Chief
Financial Officer.

1.2 Managing ESG matters throughout the investment cycle

CDC requires its fund managers to have ESG management systems that are suitable
for the level of risk of the companies in which they invest. This involves conducting
thorough environmental and social impact assessments before they invest in high-
risk companies in order to identify risks and issues, often with the assistance of
specialised technical advisors. Before or shortly after any new investment, CDC’s
fund managers should design action plans for appropriate improvements over the
investment period if shortcomings are identified in the portfolio company.

Working with its local fund managers, CDC contributes to build capacity for
responsible investment practices and sound ESG management in poor countries.




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CDC will shortly publish a Toolkit on ESG for fund managers to provide concrete
guidance on responsible investment practices and how to add value to portfolio
companies from the ESG perspectives.

This Toolkit on ESG for fund managers was produced for CDC by Rosencrantz & Co.
It builds on the Toolkit developed for CDC by Forum for the Future in 2006, with
updates based on with CDC’s new Investment Code on ESG, developments in
international best practices and standards, feedback from fund managers and
lessons learnt by CDC and other responsible investors. Please see
www.cdcgroup.com and www.rosencrantzandco.com


2. Case study: CDC’s investments in sub-Saharan Africa3

One of the most serious barriers to sustainable economic growth in poor countries is
the lack of capital available for new and expanding businesses. Sub-Saharan Africa,
with one seventh of the world’s population including 400 million people living below
the poverty line, only receives about 1% of foreign direct investments.

CDC’s role in supporting the private sector is a key element of the Department for
International Development’s (DFID) poverty reduction strategy and its private sector
programme, and complements DFID’s aid and humanitarian support programmes.
CDC is a core part of DFID’s strategy to support private sector development in its
partner countries. CDC invests its capital so as to attract further investors to poor
country markets.

For 60 years, CDC has reinvested its profits, allowing increasing numbers of
companies to benefit from CDC’s capital. Over the 2003-2008 period, CDC’s average
annual total returns were 18%. CDC’s total portfolio value at the end of 2008 was
£928m.



3
 The following section has been written by CDC and the views express are those of CDC and not
necessarily those of Oxfam, Actis, or the Church of England Ethical Investment Advisory Group.




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Compared to other development finance
institutions (DFIs), CDC is relatively more focused
on the poorest countries. Sub-Saharan Africa is
and has always been the key investment market
for CDC. CDC has a higher share of its total
investments invested in the low income countries
in sub-Saharan Africa than any other DFI.

Going forward, CDC’s investments will be even
more focused in the poorest countries. CDC’s
investment policy for the 2009-2013 period is to
invest 50% of its capital in sub-Saharan Africa and 75% in low-income countries
including in other regions.

By the end of 2008, CDC had a total portfolio value of £466m invested in 261
companies across the sub-Saharan Africa. Investments in the region make up half of
CDC’s total portfolio value. CDC is thus the single largest private equity investor in
sub-Saharan Africa, accounting for 14% of the total funds raised for investments in
the region between 2003 and 2007.




95,000 people are employed in CDC’s 190 portfolio companies in sub-Saharan Africa
which reported employment numbers to CDC in 2008, representing 70% of CDC’s
total portfolio companies in the region. For each person employed, the livelihoods of
an estimated additional four to five persons are assured. Through its investments in
commercially strong companies, CDC is thus an important contributor to economic
growth and poverty alleviation in sub-Saharan Africa.

US$600m in taxes was paid to local governments throughout sub-Saharan Africa by
CDC’s 100 portfolio companies which reported tax data in 2008, representing about
40% of CDC’s total portfolio in the region. CDC’s portfolio companies are accordingly
major contributors to increased government revenues in sub-Saharan Africa.

By the end of 2008, CDC was invested with 18 different fund managers through 42
different funds in sub-Saharan Africa. Seven of these fund managers were newly
formed investment groups. CDC’s support of first-time fund managers in sub-
Saharan Africa represents a major investment in local capacity building, which
contributes to strengthen the local capital markets. 15 of these fund managers have
local offices in 14 different countries, including Madagascar, Côte d’Ivoire, Senegal



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and Zambia in addition to the traditional African investment hubs Lagos,
Johannesburg and Nairobi.

CDC’s portfolio companies span across the African continent, from Togo to
Madagascar, Djibouti to Cameroun, and Malawi to the Gambia. The single largest
investment destination for CDC’s capital in sub-Saharan Africa is Nigeria, which, with
£111m invested in 44 different companies, represents 12% of CDC’s total investment
portfolio. South Africa and Tanzania follow as close second and third investment
markets in sub-Saharan Africa for CDC, with £90m invested in 38 different
companies and £85m invested in 12 portfolio companies, respectively. There are 39
companies in Kenya which are supported by CDC’s capital. 214 of CDC’s 261
portfolio companies in sub-Saharan Africa are located in low-income countries,
representing 82% of CDC’s portfolio value in the region.

CDC’s portfolio in sub-Saharan Africa includes companies of all different sizes, which
are active in all different sectors of the economy. Financial services represent the
single largest share of CDC’s investment portfolio, with investments in 110
companies and a total investment value of £114m. 16 energy and utility companies
represent the second largest sector investment for CDC in sub-Saharan Africa, with a
combined portfolio value of £93m. In terms of number of companies supported by
CDC’s capital, the second largest sector after financial services is industrials and
materials (excluding mining), with £45m invested in 30 companies, followed by
information and communication technology (ICT), with £33m invested in 22
companies, and consumer goods and services, with £46m invested in 21 companies.

A large number of CDC’s fund managers in sub-Saharan Africa focus on SME and
microfinance investments. Aureos pioneered private equity investments in East, West
and Southern Africa through three different regional funds. GroFin and Business
Partners focus on providing finance to help even smaller businesses expand their
activities.

As per CDC’s new Investment Policy for 2009 to 2013, CDC will continue to invest at
least 50% of its capital in sub-Saharan Africa, with a sizable proportion in SME funds.

As one of the leading investors to support private sector development in sub-Saharan
Africa over the last 60 years, CDC has acted as a catalyst for private sector
development in a number of ways.

   •   CDC, through its fund manager Actis, was an early investor in Celtel, the
       pan-African telecommunications company that pioneered the use of mobile
       telephones across Africa. CDC, through its fund manager ACA, is also an
       investor in MTN Nigeria, another major force behind the African mobile
       phone revolution which started its rapid expansion across the sub-continent
       by providing access to mobile telephony services for 20 million new
       subscribers in Nigeria. MTN and Celtel are now expanding across markets
       that still have very low mobile phone penetration, such as the DRC and
       Cameroun.

   •   CDC has invested in numerous microfinance institutions, helping the
       poorest of the poor gain access to financial services which allow them to
       finance small business ventures and thus help themselves and their families
       out of poverty. CDC’s fund managers have also invested in financial
       institutions covering the entire spectrum from microfinance to large business
       banking services. Equity Bank of Kenya, now one of the largest bank in East
       Africa, which is rapidly expanding its reach into Uganda, Rwanda and


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        Southern Sudan is an example of such a successful expanding African bank.
        Through its investment in GroFin, the first pan-African fund to provide access
        to finance for small companies needing up to US$1m of risk capital, CDC
        supports a large number of small businesses that otherwise would have had
        great difficulties accessing finance through traditional banking channels in
        sub-Saharan Africa.

Infrastructure investments, particularly in power and telecommunication installations,
continue to be a high priority for CDC. In 2007, CDC’s fund manager Actis
established a new US$750m infrastructure fund for emerging markets, which
includes several of CDC’s sizable energy assets in sub-Saharan Africa. CDC’s
portfolio companies include some of the major electricity generation and distribution
companies in sub-Saharan Africa, such as Songas in Tanzania, Umeme in Uganda,
Azito in Côte d’Ivoire, and Tsavo in Kenya.


3. Case Study: Private Equity in India4
3.1 Market overview

The Emerging Market Private Equity Association (EMPEA) provides extensive and
authoritative information on private equity and venture capital in India, as does the
Indian Venture Capital Association (IVCA). According to EMPEA estimates, in 2008
India dedicated funds raised US$ 7.7 billion and deployed US$7.5 billion in capital.
Although the industry suffered in the first half of 2009, the number of India focused
funds continued to rise in 2008 and 2009. India remains one of the top three most
attractive investment destinations for institutional investors

3.2 Fundraising Activity

PE fund raising in India saw a greater number of Indian-focused funds and sector
specific funds, as well as a number of Indian corporations financial institutions
entering the PE market. Fund managers with successful funds in the market include
Jacob Ballas Capital India, Chrys Capital each raising a fourth fund. Actis, ICICI
Ventures, IDFC Private Equity, IL&FS and Baring India are currently in the market
with their third funds. There are also a number of captive and sponsored funds
appearing in the market including Tata, Reliance, Aditya Birla and Mittal. Tata Capital
launched its first PE vehicle in 2008, with a target of US$200 - US$300 million, aimed
at investments in mid sized health care and technology companies. Azim Premji of
Wipro provided funding for the US$1 billion evergreen fund, PremjiInvest, which has
invested in 40 companies since 2006.

Reflecting the growing sophistication of the Indian market, several new sector
focused funds are now emerging including agribusinesses and life sciences (Table
1). Infrastructure and technology are also becoming big attractions for private equity.
Cleantech and renewable energy sectors are increasingly being targeted by PE
investments. According to a study by the Cleantech and Deloitte, India accounted for
11% of the US$1.2 billion spent on the sector in North America, China, India and
Europe in the second quarter of 2009. Examples include: ILFS stake of 5% in a
waste management company Ramky Enviro Engineers for US$42 million; Pangea


4
  The following section has been written by Ritu Kumar from Actis and the views express are those of
Ritu Kumar and not necessarily those of Oxfam, Actis, CDC or the Church of England Ethical
Investment Advisory Group.




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Capital (Bermuda) invested $30 m in a solar power company, Cobol Technologies
and IDFC Private Equity invested US 75million in Green Infra.

Limited partners include foreign investors and pension funds, banks, corporations
and investment managers. Indian pension funds are still prohibited from investing in
private equity. Whereas the net effect of the global economic recession is unclear,
EMPEA’s 2008 survey of Institutional Investor Interest revealed that 77% of
LPs[note] surveyed expect to be investing in India within the next three to five years.

Figure 1: Number of India-focused funds launched by year (2004-2008)
(source: EMPEA)




Table 1: Sector-focused India funds (2008)

Fund Manager               Most recent fund (vintage Sector
                           year, size)
3LOGi           Capital, Evolvence India Life Science Life Sciences
Evolvence Capital        Fund (2007, US$150m)
A K Purwar and Ajay Health Care Fund (US$200m)                Healthcare
Piramal
Cinema Capital Venture Cinema Capital Venture Fund Entertainment
Fund                   (2008, US$178m)
India Rizing               India Rizing      Fund    (2008, Defence
                           US$100m)
Rabobank          Private India Agribsiness Fund (2008, Agriculture/Agribusiness
Equity                    US$100m)
Tuscan Ventures            Tscan   Ventures          (2007, Logistics
                           US$50m)
YES BANK Limited           Food and Agribusiness Fund Agriculture/Agribusiness
                           (2008, US$100m)
Source: EMPEA




3.3 Status of sustainable investment



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The growing private equity market in India and the trends outlined above can be a
positive force from a sustainability perspective. The ownership structure of private
equity and the injection of high quality management in portfolio companies have the
potential to ensure that the managers of private equity funds can make sustainability
an integral element of their investment strategy. In cases where the general partners’
stake in investee companies is large and visible, the potential to integrate
sustainability factors into investment analysis and decision-making is particularly
significant.

Since investment managers have a close relationship with the company
management, it is relatively straightforward to engage on issues relating to
environmental, social and governance factors. Very often, private equity investment
managers sit on company boards, giving them direct access and influence to shape
an ESG agenda. Private equity firms generally hold their investments for 3-5 years, a
period long enough to bring about change and add value for example, through:
carbon reduction programmes, energy efficiency, improved environmental standards,
environmental management systems, and health and safety management systems.

The entry of groups like Tata and Birla into the private equity investor sphere, as
mentioned in the previous section, is also encouraging from a sustainability
perspective since these groups have repeatedly demonstrated a commitment to good
ESG practices in the their corporate activities.

An analysis of existing sustainable investment practices in the Indian private
equity/venture capital market can be broken down into three main (but overlapping)
topics:
        Integration of ESG issues (primarily risks) into the investment policies of
        ‘mainstream’ private equity funds (i.e. funds that are not specifically focused
        on sustainability-related investment themes);

       Private equity and venture capital funds focused on provision of infrastructure,
       including clean energy and renewables; and

       Venture capital funds and related technical assistance programs focusing on
       social enterprises and sustainable entrepreneurs towards the ‘base of the
       pyramid’.


3.4 Sustainability in mainstream private equity

At the ‘mainstream’ end of the spectrum, few GPs and private equity funds in India
have formal ESG policies and procedures dealing with sustainability-related risks
and/or responsible investment values.

There are a few exceptions particularly amongst funds whose LPs include
multilateral/bilateral development finance institutions (DFIs). Such DFIs include IFC,
the Asian Development Bank (ADB), the US Overseas Private Investment
Corporation (OPIC) and CDC. The policies of IFC and many other such DFIs
stipulate that private equity funds in which they invest must follow certain social and
environmental procedures, including negative screening on issues such as child
labour and compliance with applicable national and World Bank standards and
guidelines. DFIs such as IFC provide guidance on their environmental and social
requirements and occasionally run training programs for their GPs.




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The UK-based firm Actis, which has been investing in India since 2004, has a well-
defined and comprehensive management system for incorporating environmental,
social and governance issues into the investment process. This integration occurs at
all stages of investment decision making, from origination through to investment
appraisal and management of portfolio companies. Most other mainstream PE firms
have no systematic procedures for identifying environmental or social impacts or for
subsequently engaging with the investee companies to improve environmental and
social standards.

Infrastructure and clean energy funds

PE firms are capitalising on the immense need for increased and better infrastructure
in India, estimated at US $500 billion over the next five years, by targeting logistics,
shipping, engineering and construction companies. According to EMPEA estimates,
PE firms injected US$4.5 billion into infrastructure related sectors in 2007, more than
double the amount invested in 2006. Examples of 2008 PE investments in the
infrastructure space include Sabre Abraak Capital’s US$25 million investment in
Hyderabad based Engineering and Construction Company, Blackstone’s US$60
million investment in Allcargo Global Logistics and IDFC Private Equity’s US$28
million investment in Seaways Shipping.

IDFC Private Equity also invests in social infrastructure (health care, education) and
rural infrastructure. In the last couple of years, IDFC has consciously built a ‘green
infrastructure’ portfolio, with an estimated investment of US$ 200million in green
projects including PV and water management. They also have minority shareholding
in a carbon advisory service company, Emergent Ventures and a proposed majority
shareholding in an aggregated portfolio of clean energy assets (including small
hydro, renewables and wind). The motivation behind investing in the green space is
mainly driven by commercial returns, which are perceived to remain robust even in
the current climate of economic uncertainty and slow down. IDFC follow the
environmental and social policies and standards prescribed by their LPs, notably
ADB, CDC and IFC.

Another major player in the infrastructure space in India is Infrastructure Leasing and
Financial Services (IL&FS). IL&FS invests in power generation, construction, roads,
water and urban infrastructure facilities. It is unique in that it has developed an
approach that internalises environmental and social considerations into project
design and development and has a dedicated group of professionals to manage
environmental and social issues across its portfolio.

YES Bank’s private equity arm has raised US$125 million for its South Asia Clean
Energy Fund (SACEF) and intends to raise a further US$75 million by June 2009.
Although there has been a delay in fund closing due to the global recession, YES
Bank remains confident that it will meet its fund raising target and plans to invest $7-
10 million each in 20-25 companies in the areas of renewable energy, energy
efficiency and sanitation solutions. The bank is also planning a $500 million
infrastructure fund, a $40 million food and agriculture fund and $250 million life
sciences fund. The main challenges YES Bank faces in the managing its investments
in this space relate to measurement and monitoring of social returns and how these
could be integrated with overall financial returns.

Sustainable VC for SMEs

India is a partner of the New Ventures program, an initiative of the World Resources
Institute (WRI) that aims to promote sustainable growth in emerging markets by


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supporting and accelerating the transfer of capital to businesses that deliver social
and environmental benefits at the base of the economic pyramid. New Ventures
focuses on small and medium sized enterprises in fast-growth, environmental and
base-of-the-pyramid (BoP) sectors such as ecotourism, renewable energy, clean
technologies and water management.

Each New Ventures country program releases an annual Call for Business Plans
from businesses in target sectors seeking investment from US$100,000 to US$5
million. New Ventures screens businesses for financial outlook, innovation, market
potential, and social and environmental benefits. New Ventures selects profitable
SMEs that safeguard the environment and engage local communities while creating
new markets and strong investment opportunities. Once selected into the New
Ventures Portfolio, SMEs receive intensive business consulting services that improve
their business plans, help increase sales, and better prepare them to move into new
markets. Investors have an opportunity to interact with the New Ventures companies
at an annual New Ventures Investor Forum.

New Venture India (NVI) is run in partnership with the CII-Sorabhji Godrej Green
Business Centre in Hyderabad. It is also supported by USAID under the Global
Development Alliance mechanism and British High Commission under the Strategic
Programme Fund, the Asia Pacific Partnership and the Citi Foundation.

In November 2007, NVI launched the Green Investor Network, which serves as a
platform for investors to interact with sustainable enterprises. It is a membership-
based network of mainstream and blended capital investors whose aim is to facilitate
investment into high growth sustainable enterprises in sectors such as clean
technologies, green building materials, recycling and reuse, advanced water
technologies, renewable energy, eco-tourism, and decentralised energy. Members
of the Green Investor Network include the Acumen Fund, Nexus India Capital, Rianta
Capital, Seqouia Capital, Siemens Venture Capital and Agnus Capital Partners.

Discussions with some members of the Green Investor Network (e.g. Nexus) reveal
that the prime motivation behind their investments is commercial and not social.
Their investment thesis is that sustainability is closely aligned with growing consumer
demand with benefits for the investor, the entrepreneur and society. Investors like
Nexus are not seeking to enhance its image by being “socially responsible” - instead,
they see this as a challenge that will reap financial benefits.

3.5 Development strategies for private equity

The growth of PE funds in general and venture capital in particular is encouraging
from a sustainability perspective; the ownership structure of this asset class has the
potential to ensure that ESG issues can be successfully integrated into management
systems, provided of course that there is a willingness to do so. The examples of
Actis, IL&FS, IDFC private equity, and YES Bank private equity as well as the New
Ventures India programme are especially encouraging, as all of these aim to be
commercially successful while generating environmental and social returns from their
investments. The need of the hour is to replicate these examples and assist the
sector in developing these models further and faster. Potential measures to facilitate
this include:

       Training GPs on integrating ESG issues into mainstream investment analysis
       through the development of appropriate management systems. IFC’s
       Performance Standards for private equity funds and the Actis model both
       provide good examples.


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           Making tools and training available to the sector on calculation of social
           returns and integrating this into financial analysis.

           Training to help LPs interface with GPs on ESG issues, in collaboration with
           UNPRI and its private equity work stream.

           Strengthening capacity and good practice guidelines for disclosure and
           reporting on ESG issues in response to the increased demand for
           transparency.

           Working with the Green Investor Network to promote investments in clean
           technology, renewables and social enterprises.



*      *      *

This note has been written by Marie Rosencrantz and James McVeigh, from CDC,
and Ritu Kumar from Actis.


For more information on the Better Returns in a Better World (BRBW) project, see
http://www.oxfam.org.uk/resources/issues/privatesector/investment.html

Helena Viñes Fiestas (Oxfam GB)
    HVinesFiestas@oxfam.org.uk

Rory Sullivan
    Rory@rorysullivan.com

January 2010

-------------------------

More information about CDC and the development effects of its investments can be
found in the report Growth for Development, which was produced by Rosencrantz &
Co and published in July 2009. CDC’s new Toolkit on ESG for fund managers, also
produced by Rosencrantz & Co, will be published shortly. It will provide concrete
guidance on responsible investment practices and how to add value to portfolio
companies from the ESG perspectives. It builds on the Toolkit developed for CDC by
Forum for the Future in 2006, with updates based on with CDC’s new Investment
Code on ESG, developments in international best practices and standards, feedback
from fund managers and lessons learnt by CDC and other responsible investors.
Both documents can be down-loaded from CDC’s webpage www.cdcgroup.com
Please see also www.rosencrantzandco.com




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