CDC Group plc, the government-owned fund management business tasked to invest in private businesses in developing countries, has exceeded the financial and investment targets set for it in 2004, when it was restructured. CDC has secured a good return on public funds, in a portfolio weighted towards poor countries, and to that extent it has achieved good value for money. But the Department for International Development (DFID) needs better information to show how far profitable CDC investment contributes to poverty reduction, and to confirm improved monitoring of compliance.CDC's assets grew from £1.1 billion in 2004 to £2.7 billion in mid-2008 an average annual rate of growth of 24 per cent. CDC now has £1.4 billion in cash, more than it has invested in developing countries. CDC has committed to investment totalling £1.7 billion over the next few years. But it has previously over-estimated the rate at which cash would be needed by its fund managers.Over seventy per cent of CDC's portfolio is targeted on poor countries, compared with seven per cent of foreign investment overall. Since 2004, CDC has increased its investment in China, Nigeria, India and South Africa, which now account for two thirds of its portfolio - countries which contain most of the world's poor people, but which also attract inward investment from other sources. DFID needs evidence on how far CDC's investments add to total private investment.To ensure that good financial returns contribute to development without adverse consequences - such as environmental damage or poor health and safety - CDC espouses sound ethical business principles. CDC's reporting to DFID on their implementation, however, has been selective, saying nothing about levels of compliance with them. By mid-2008, CDC had evaluated the development and poverty impact of four of the funds it invests in, but these evaluations lacked depth. CDC is now continuing its evaluation work, focusing on new investments made since 2004.DFID and CDC have put in place a sound governance model, although there have been concerns over how it has worked in practice. Reporting and monitoring of executive pay, for example, should have been stronger. DFID approved a pay framework designed to incentivise good performance, especially financial performance. Following performance which exceeded benchmarks, CDC awarded executives pay packages well above thresholds set in 2004 as requiring prior consultation with DFID. DFID has been working with CDC to improve the oversight of remuneration, and to remove ambiguities in the original agreement.