Indian Economy News

UK body CDC looks to invest $3 billion in India; climate change solutions a priority

  • IBEF
  • December 6, 2021

Mr. Nick O'Donohoe, Global Chief Executive, CDC Group said that the British government development institute CDC is planning to invest up to US$ 3 billion in India over the next five years. He said that a large part of this investment in equity and debt would flow into projects that help tackle the climate issue.

CDC is likely to increase its exposure to early-stage investing in the country. CDC rechristened itself as a British international investment last week. Their current total portfolio value in India stands over US$ 2 billion.

India has become a must-have market for most global investors. The liquidity rush into the Indian market, both through private and public market deals, is evidence of the country's increasing importance in the playbook of global investors. So far US$ 55 billion has been invested by private equity and venture capital funds.

"We are looking at investing up to US$ 1 billion in climate finance in India over the next five years. The capital will flow into climate mitigating projects and businesses to help the country get closer to its climate change targets," Mr. O'Donohoe said. CDC has invested over US$ 1 billion in climate finance across Africa and South Asia over the last four years.

With US$ 100 million in commitments in 2018, CDC has invested in companies like CropIn (Agri-tech firm) and Roserve (US$ 10 million), the water treatment and management company. Also starting a new renewable platform Ayana Renewable Power.

Tata Cleantech Capital has received a debt funding of US$ 30 million, which focuses on e- mobility, water, and energy efficiency. CDC Asia has locked over 20 commitments to a range of businesses and funds in India this year, including in Green Growth Equity Fund (GGEF), Fourth Partner Energy, and follow-on investments in e-grocer BigBasket, among other prominent consumer brands.

Apart from supporting companies directly, the development finance institution also advances as a limited partner, or LP, in India-focused early stage and growth stage VC and PE funds. It has financed funds such as Fearing Capital, Lighthouse Funds, Kotak PE, Aavishkaar, and Lok Capital. When early-stage investments are experiencing an upsurge in the country, CDC is also increasing its exposure to this asset class.

Venture capital funds assist CDC in investing in early-stage new-age economy companies. "CDC's Venture Capital program has been active over the last 18 months. We have been increasingly backing more India-centric impact-driven funds and will increase our pace of investment in this asset class going forward," O'Donohoe said.

According to him, the unparalleled flush of liquidity in the startup ecosystem stems from robust fundamental growth in the Indian economy. "We are believers in this growth story and will continue to back this with more investments going forward."

In India, CDC's early-stage investments have come across VC funds such as Chiratae Ventures IV, Stellaris II, 3one4 III. "We also invested alongside our fund managers in companies such as Bizongo, Betterplace, and Vayana Networks," said Mr. Srini Nagarajan, Managing Director and Head of Asia, CDC.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.