In this blog, taken from our Annual Review 2015, CDC’s Chief Executive, Diana Noble, looks back at 2015 – a ‘year of landmark events’.
We continued to grow our ambition and impact during 2015. A number of landmark events demonstrate the progress we’re making towards our vision of a distinctive, enduring institution.
In July, the UK Government invested £735 million in CDC, over five times the net amount invested in us since our inception in 1948. This was a telling endorsement for the strategy we agreed in 2012, and our performance against the expectations we set. We do however remain determined to invest the new capital wisely and stay true to our philosophy of never valuing volume of investments or size of portfolio ahead of the quality of outcomes. The funding will be drawn only as needed, largely to fund a growth in our direct debt business, where we believe there is market demand to do more.
Then in September, we partnered with Norfund, the Norwegian DFI, in an agreement valued at over $700 million, to take direct ownership of Globeleq, the largest independent power producer in Africa. This is an example of our increasing ambition to bring about large-scale transformation. Our vision, through a new strategy, management team and Board, is to create the leading African developer of new power projects; one that is trusted by governments, and can consequently add large-scale power generation for the benefit of African people and businesses.
We continued to exceed our agreed objectives for both development impact and financial return, although our pre-2012 portfolio will continue to dominate returns for a few more years. The post-2012 portfolio looks promising, but it is early days and we expect the next few years, especially in Africa, to provide a much more challenging environment than the past decade.
In addition to taking direct ownership of Globeleq, we made 27 new investments totalling £712.9 million. Our portfolio in Africa and South Asia supported 17.9 million direct and indirect jobs, of which 1.03 million were newly created jobs. Importantly, it also contributed $2.6 billion in local taxes.
The CDC team has also grown in line with investment pace and the needs of a larger direct portfolio. However, growing attrition does give some cause for concern; it’s crucial that we provide a fulfilling environment that not only attracts great people but also retains them for timeframes that match our often decades-long investment cycle. To support this, an important exercise during the year culminated in some distinctive identities for CDC to unite around; these are detailed on page 36.
Risk in many forms is inherent to our work. As Erik Solheim wisely comments on page 18: “it’s always difficult to be the first to invest”. We know we’ll never eliminate risk: many of our decisions require finely balanced judgements, which we’ll sometimes get wrong. But we do what we can to manage it. During 2015, we upgraded our risk frameworks: first to ensure we identify, understand and, where possible, mitigate risks, and second to make sure the residual risks don’t exceed tolerable levels. The process was led by our new Chief Financial Officer and overseen by a new Board Risk Committee. Looking forward to 2016, we’ll review with our shareholder how we’ve performed against the expectations set for the 2012-16 strategy period, and plan what we want to achieve for the next five years.
While we can always improve, I anticipate that continuity and consistency will be our guiding principles. One of our team’s greatest achievements has been to re-establish CDC’s reputation in our markets as a pioneering, long-term, yet commercial investor. And we want to continue building on this.
This article was originially published in our Annual Review 2015: Growing in ambition and impact, which you can read in full here.
