Market turmoil delays CDC float

FINANCIAL MARKET turmoil may have set back plans to privatise Commonwealth Development Corporation, the state-owned investment company, by at least two years, it has emerged.

It was originally expected that the public would be offered shares in CDC - which yesterday announced a pounds 42m post-tax loss and a negative return on capital - later this year. Now the initial public offering of CDC, once touted as Labour's first privatisation, is not expected to be made until mid-2001.

A CDC spokesman, who stressed the privatisation would still take place, said: "We will go ahead with the offering when market conditions are right."

The parliamentary bill laying out the legal framework for the privatisation of CDC, an emerging market specialist, has already passed through the Lords. It will shortly receive its second reading in the House of Commons and is expected to become law by the summer.

If there are no hitches, CDC will convert to a plc by year-end, and the Department of International Development will become its sole shareholder. The department is expected to begin whittling down its shareholding in CDC - whose investments range from bananas in Costa Rica to pineapples on the Ivory Coast - two years from now.

Unveiling the 1998 results yesterday, Roy Reynolds, CDC chief executive, said: "Emerging markets had another difficult year in 1998." In the year to 31 December, CDC's operating surplus fell by pounds 22m to pounds 110m.

A near-tripling of provisions to pounds 155m took the total deficit after tax to pounds 42m, compared to a pounds 64m surplus in 1997.

Outlook, page 19