Shareholder Executive

Actis

Purpose

Actis promotes and manages private equity funds in Africa, Latin America, China, India and South and South East Asia. Its principal activity is fund management on behalf of third party investors.

Legal Status and Ownership details

Actis was established in July 2004 as a spin out from CDC.Actis is a limited liability partnership, owned 60% by its partners and an employee share trust, and 40% by the Secretary of State for International Development. The Government has an 80% economic interest until 2013 and 40% thereafter.

Government's Objectives

Vision

Actis’ purpose is to develop and maintain a proven track record as a successful private equity fund manager in developing countries.

Objectives

To mobilise and invest private and other third party capital to generate attractive returns for investors in a responsible manner so as to maximise the creation and long-term growth of viable businesses in developing countries.

Financial Performance¹

£m	20082	2007	2006
Turnover	-	70	55
Operating Profit	-	5	10
Profit available for division among members3	-	(1)	2
Net Cash flow	-	9	1
Net Operating Assets4	-	5	7
Shareholders' Funds	-	2	2
Dividends	-	-	-

Dividend policy

Government’s shareholding entitles it to 80% of distributable profits of the business through to 2013 after relevant deductions under the Members’ Agreement, although there have been no residual profits available for distribution since Actis was created.

Performance targets

Under the Members’ Agreement, DFID does not take part in the day-to-day operations of Actis and has no Board representation. Accordingly, performance targets for the business are determined by the Board. These are based on their strategic objectives and include fund-raising and fund management returns.

Notes

¹ Actis reports in US dollars. Reported figures are converted into sterling using the 31 December rate for each year as Actis reports on a calendar year basis. Financial performance figures are for the LLP only.
² Figures for 2008 calendar year have not been published at the date of publication of this report.
³ The profit or loss for the year is allocated in accordance with the Members’ Agreement.
⁴ Net operating assets are stated before deducting cash at bank. In the prior year’s annual report, cash at bank was deducted in arriving at net operating assets.

Commentary

Actis has US$4.8bn of funds under management and a growing portfolio of investments in Africa, Latin America, China, India and South and South East Asia overseen by investment professionals in local teams across all of its major markets.

Actis continued to attract third party capital, announcing at the end of 2008 the successful close of the Emerging Markets 3 Fund, with total commitments of US$2.9bn. The fund attracted 100 Limited Partner investors and was one of the largest dedicated emerging markets private equity funds raised globally in 2008.

Actis has grown investment levels in 2008. In spite of the effects of the global downturn, it made private equity investments in 2008 totalling US$475m in a range of sectors and across the emerging markets.

Actis was awarded Private Equity International magazine’s African Private Equity Firm of the Year in 2008 for the second year running.

Actis has responded to the lower levels of demand and slower growth now being experienced in its target markets by focusing on the management of its existing portfolio businesses and working closely with local leadership teams to enable them to better address the challenges they face.

The introduction of significant improvements in corporate governance is an example of a typical ‘value add’ resulting from Actis’ partnership with its investee companies.

Following a strategic review, Actis is now in the implementation phase of recommendations, seeking to further enhance performance by re-defining the composition of the portfolio, and putting in place a more sophisticated organisational structure, with the people and culture to deliver it.

The new structure aligns the firm’s private equity business around four key sectors of expertise: Consumer & Retail, Financial Services, Business Services and Industrials.

Looking forward,Actis is well positioned to take advantage of new opportunities in its target markets. It has substantial capital still to invest from its Emerging Markets 3 Fund in a steadily improving buying environment.

Sir Tim Lankester’s appointment as a Non-Executive Director was extended at the end of 2008 for a further year. Jacob Worenklein joined the Board in 2009 following the departure of Peter Wheeler.