Darby Overseas Investments Ltd has long been active in Asia and Latin America. Now the emerging markets investment firm is turning its attention to central Europe.
The firm has secured €100 million ($121 million) to offer mezzanine loans in Central and Eastern Europe. Its business in the region will focus on those countries that joined the European Union last year, and those now in line for membership including Bulgaria, Romania and Turkey.
Darby’s regional headquarters will be based in Vienna, where it recently opened a joint office with its parent company, fund management giant Franklin Templeton Investment Ltd. The firm will have five team members based there, as well as three others in Warsaw and Budapest. It is also planning a fourth regional office in Turkey.
“We believe that countries in Central and South-eastern Europe are a highly attractive market for deploying mezzanine capital,” the firm’s chief executive, Richard Frank, explained in a statement. “First, they have a favourable investment climate due to continuing superior economic growth and, second, long-term risk capital is being sought both by middle-market companies and by infrastructure projects.”
Darby has an impressive pedigree in this type of investment. The firm was founded in 1992 by former US Treasury Secretary Nicholas Brady, the man responsible for the ’Brady Plan’ which attempted to resolve the debt problems suffered by emerging markets in the 1980s. To date it has invested $450 million in more than 20 countries in Asia and Latin America. The firm first established a European presence in January, when it took over CalPERS and Germany’s Allianz AG as the GP and investment advisor of the 2000 vintage $225 million DKB Emerging Europe fund.
A quick glance at Frank’s own biography highlights why he is the man to lead an emerging markets firm. He joined Darby in July 1997 after a long career at the World Bank and International Finance Corporation (IFC) in Washington, D.C. In his most recent role with the group he coordinated the private sector activities of the World Bank and IFC with those of the Multilateral Investment Guarantee Agency (MIGA), the body responsible for encouraging direct foreign investment in developing countries.
For a period he also oversaw the World Bank’s South Asia and Latin America operations and chaired the bank’s Finance Committee, and earlier in his career was active in project and investment work throughout Latin America, Asia, the Middle East and Eastern Europe. Today he is on the Boards of several Latin American companies and banks, and until recently he chaired the Latin American Venture Capital Association.
In an article in World Trade Magazine last April, Frank described the “huge and growing backlog” of investment needed in emerging markets. Following its latest expansion, Darby has the capacity to provide both equity and mezzanine financing in Asia, Latin America and Central Europe. The firm could be ready to step into the breach.