Darby in debut Asian deal

Darby Asia Investors has completed its first mezzanine financing since acquiring Prudential Asia’s mezzanine fund in April.

Darby Overseas Investors, the emerging markets investor, is making progress with its strategy of making mezzanine commitments to emerging markets with the completion of two transactions in Korea and Bolivia.

The Korean deal, a combination of mezzanine securities totalling approximately $37m in broadband communications provider GNG Networks, is the first carried out by Darby Asia Investors, the $246m mezzanine fund formerly known as Prumerica Asia Infrastructure Investors (PAII) until Darby acquired it earlier this year from Prudential Financial.

Robert Graffam, managing director of mezzanine finance at Darby, said the fund’s main areas of interest in the region are likely to be China and the Philippines as well as Korea. “We are targeting infrastructure and energy companies in these countries and see them as having considerable potential.” The fund, which had already made eight mezzanine investments prior to Darby’s involvement, has now invested $200m. A further $100m is still to be invested and Darby also intends to redeploy funds gained through portfolio divestments.

Korea leads the world in broadband access, with penetration currently running at 30 per cent. “The GNG investment was at the top end of our $5-40m range, but the $37m commitment reflects our confidence in GMG and the Korean broadband market as a whole,” adds Graffam.

Darby’s mezzanine business is one of a number of providers targeting the emerging markets of Asia. Intermediate Capital Group, the UK-quoted mezzanine provider, is in the process of raising a $150m mezzanine fund that will service the buyout markets in Japan, South Korea, Australia and Hong Kong. It is the first effort undertaken by a European mezzanine house to expand into the Far East.

Darby has also announced a new investment from its Latin American Mezzanine fund. DLAMF has provided $16m in mezzanine financing in support of the expansion of the Bolivian section of the Bolivia-Brazil gas pipeline. The investment in Gas TransBoliviano represents the $200m fund’s sixth financing package and increases the fund’s aggregate commitments to $103.5m.