Franklin buys Darby Overseas Investments

Franklin Templeton Investments has acquired the US emerging markets investment firm in a deal valued at $75m.

( US emerging markets private equity firm Darby Overseas Investments has sold itself to Franklin Resources, a division of Franklin Templeton Investments, for $75.88m.


Franklin Resources already owned just under 13 per cent of Darby, according to a press release.


Darby, which manages $700m in private equity and mezzanine funds, will continue to operate as Darby and Nicholas Brady and Richard Frank will remain chairman and chief executive officer, respectively.


Darby sees the sale as an opportunity to strengthen their line of products and take them globally, a source familiar with the situation said. Franklin gets to expand their offerings as well by being able to offer private equity and mezzanine products in markets they already have a presence in.


Besides Franklin’s investment in Darby, the two organizations are very familiar with each other. Brady has served as a director of 17 Franklin Templeton Investments funds since 1993. Frank has been a director of two funds. Mark Mobius, a managing director of Templeton Asset Management, has served on Darby’s advisory board.


“We think it’s an opportune time for their firm to back one like ours,” Frank said. “We’ve seen a lot of opportunity in Latin America and Asia. With their support, we can accelerate our growth.”


Frank added that Darby’s fund raising capabilities will also be helped by Franklin Resources. The private equity in emerging markets sector is not very well known, but the Franklin name is, so Darby will be able to make presentations to potential investors they may not have been able to make in the past.


“We are very pleased to bring Darby Overseas Investments on board to expand our investment offerings in the alternative strategies arena and further meet the needs of our institutional and fiduciary individual clients,” Charles Johnson, chairman and chief executive officer of Franklin Resources, said in the statement.


Last month, Darby Asia Investors announced its Asian Infrastructure Mezzanine Capital Fund made a $35m investment in Filipino power and infrastructure development company First Philippine Holdings Corp. The fund purchased $35m, eight-year term notes with call options to First Generation Holdings, a majority owned subsidiary of First Philippine Holdings.


In March, Darby appointed Denis Jungerman as senior advisor to assist the firm expand its operations in Brazil and launch the first local currency mezzanine fund in an emerging market country.


Franklin Templeton has relationships with other private equity firms as well. In 2001, the mutual fund management group made an agreement with the Auda Group to develop hedge fund and private equity offerings. Under the terms of the agreement, Auda will provide fund-of-fund products in key alternative asset classes, including hedge funds and private equity, which Franklin Templeton will offer to qualified investors.