British International Investment

Last updated

British International Investment plc
Company type Development finance institution
IndustryDevelopment finance institution [1]
Founded1948
HeadquartersLondon, United Kingdom
ProductsInvests equity and debt directly and through funds. [1]
Websitebii.co.uk

British International Investment, (formerly CDC Group plc, Commonwealth Development Corporation, and Colonial Development Corporation) [2] is the development finance institution of the UK government. [3] The Foreign, Commonwealth and Development Office is responsible for the organisation, and is the sole shareholder. [4] It has an investment portfolio valued around US$7.1 billion (year-end 2020) [5]  and since 2011 is focused on the emerging markets of South Asia and Africa. [6]

Contents

History

Formation

The original Colonial Development Corporation was established as a statutory corporation in 1948 by Clement Attlee's post-war Labour government, to assist British colonies in the development of agriculture. [7] Following the independence of many colonies, it was renamed the Commonwealth Development Corporation in 1963 and was permitted to invest outside the Commonwealth in 1969. [8]

Commonwealth Development Corporation Act 1999
Act of Parliament
Royal Coat of Arms of the United Kingdom (variant 1, 1952-2022).svg
Parliament of the United Kingdom
Long title An Act to make provision about the Commonwealth Development Corporation.
Citation 1999 c. 20
Dates
Royal assent 27 July 1999
Other legislation
Repeals/revokes
  • Commonwealth Development Corporation Act 1982
  • Commonwealth Development Corporation Act 1986
  • Commonwealth Development Corporation Act 1995
  • Commonwealth Development Corporation Act 1996
Amended by
  • Commonwealth Development Corporation Act 2017
Status: Amended
Text of statute as originally enacted
[Commonwealth Development Corporation Act 1999 Revised text of statute as amended]

As part of the Commonwealth Development Corporation Act 1999, CDC was converted from a statutory corporation to a public limited company renamed CDC Group plc, with all shares owned by the UK Government. [9]

Actis spin-out

In July 2004 CDC spun out an emerging markets private equity fund manager, Actis Capital, with a 60% stake sold to the management team. CDC remained an active sponsor of Actis's investment activities, committing the equivalent of 650 million US dollars to the firm's third fund. [10] Following its reorganisation, CDC ceased making direct investments and became purely a fund of funds investment company. During this period it grew in value from £1.2 billion to £2.8 billion, investing in almost 1000 businesses in 70 developing countries. These businesses employed almost a million people and paid over US$3 billion a year in taxes.

Criticisms of CDC

CDC was the subject of extensive investigations by the magazine Private Eye , which devoted seven pages to criticizing the organization in September 2010. Amongst other allegations, it claimed that CDC had moved away from financing beneficial international development towards seeking large profits from schemes that enriched CDC's managers while bringing little or no benefit to the poor; and that when Actis was spun out it was given an "implausibly low valuation". [11] The Actis deal was also the subject of criticism by British politicians. [12] [13]

Review and reform

On 12 October 2010, the Secretary of State for International Development, Andrew Mitchell announced to Parliament that the British Government was to reconfigure CDC, [2] [14] saying that whilst he applauded its financial success, it had also "become less directly engaged in serving the needs of development". On 22 October 2010 the International Development Committee announced that it was to conduct an inquiry into CDC to examine issues such as its effectiveness and possible reforms, including its abolition. [14] Their report was published on 3 March 2011 with the government's response delivered on 18 May 2011. [15] [16] In 2011 CDC implemented a new business plan, focusing its investments on the poorer countries of South Asia and sub-Saharan Africa, as well as once again providing direct investments to businesses alongside its fund of funds model. [17]

2021 rename

In November 2021, the FCDO announced that it would rebrand the CDC as British International Investment (BII) in 2022 as part of a strategy to deepen economic, security and development ties globally, increasing its financing to 9 billion pounds by 2025. [18] Foreign Secretary Liz Truss said in the announcement the change was to "grow economies across Asia, Africa and the Caribbean while drawing them closer towards free-market democracies and building a network of liberty across the world". A group of NGOs and trade unions criticised the change as part of a move to "repurpose BII as an institution that focuses solely on private-sector investment and profit-making, rather than development goals and poverty reduction", and as part of offering an alternative to foreign partners to loans from China. [19]

See also

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References

  1. 1 2 "Our company - British International Investment".
  2. 1 2 "Written Ministerial Statements 12 October 2010". Hansard .
  3. ↑ "Commonwealth Development Corporation: A report on the efficiency and costs of, and the service provided by, the Commonwealth Development Corporation". Competition Commission. June 1992. Archived from the original on 3 December 2008. Retrieved 5 December 2008.
  4. ↑ "Our corporate governance". British International Investment. Archived from the original on 7 April 2022. Retrieved 29 September 2021.
  5. ↑ "Key facts". British International Investment. Retrieved 19 June 2018.
  6. ↑ "Our". British International Investment. Retrieved 7 April 2022.
  7. ↑ "From aid agency to cash machine?". BBC File on 4. 15 July 2008. Retrieved 2 January 2010.
  8. ↑ Morton, Fred; Ramsay, Jeff; Mgadla, Part Themba (2008). "Colonial Development Corporation (CDC)". Historical Dictionary of Botswana. African Historical Dictionaries. Vol. 108 (4th ed.). Metuchen, New Jersey: Scarecrow Press. pp. 74–5. ISBN   978-0-8108-5467-3.
  9. ↑ "CDC Public/Private Partnership". HM Treasury. Archived from the original on 5 October 2007. Retrieved 12 April 2012.
  10. ↑ CDC commits $650m to Actis emerging markets funds. AltAssets, 21 May 2008
  11. ↑ Richard Brooks (journalist) (3 September 2010). "That's Rich". Private Eye . No. 1270. It claimed that the 60% of Actis sold was valued at £373,000 in 2004; and that the National Audit Office valued the entire business in late 2007 at between £182m and £525m, a value which it later retracted but which nevertheless suggested a discrepancy.
  12. ↑ Ned Temko (25 November 2007). "MPs blast 'incompetent' Brown over company sell-off". The Observer .
  13. ↑ Gerry Northam (15 July 2008). "From aid agency to cash machine?". BBC File on 4.
  14. 1 2 "Committee announces inquiry into the Future of CDC". Houses of Parliament. 22 October 2010.
  15. ↑ The Future of CDC; Fifth Report of Session 2010–11 (PDF) (Report). Vol. 1. House of Commons International Development Committee. 3 March 2011.
  16. ↑ The Future of CDC: Government Response to the Committee's Fifth Report of Session 2010-11 (PDF) (Report). House of Commons International Development Committee. 18 May 2011.
  17. ↑ "A New Business Plan for CDC". Business Fights Poverty. 11 July 2011. Retrieved 12 January 2021.
  18. ↑ MacLellan, Kylie (25 November 2021). "UK to expand development finance investment to boost growth". Reuters. Retrieved 22 December 2021.
  19. ↑ Davies, Lizzy (21 December 2021). "UK accused of abandoning world's poor as aid turned into 'colonial' investment". The Guardian. Retrieved 22 December 2021.
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