Darby Brings BBVA Into LatAm PE Plan

Washington-based firm Darby Overseas Investments Ltd. launched its second direct investment private equity fund focused on Latin America with a target of $250 million. The fund will be co-sponsored by Darby and Spain?s largest bank, Banco Bilbao Vizcaya Argentaria SA.

Both sponsors have contributed an undisclosed amount of equity to the fund and will have equal representation on the fund?s boards of directors and on its investment committee. The remainder of the fund is being raised from institutional investors predominantly in Europe. The fund will take both majority and minority stakes in businesses in consumer-related industries, retail, communications technology, energy, financial services related to distress, and manufacturing related to consumer industries. There will be a special focus on businesses in Mexico, Brazil and Argentina.

Julio Lastres, a managing director of the fund at Darby, said the fund will look to invest in established companies, but not necessarily late-stage companies. He specified that the firm is interested in Latin American companies that have “good management, companies that can rise to the occasion in this new environment of heavy competition both internally and from external markets, and have the potential to become leaders in their sectors, their country or cross-border in the region.”

Lastres will tend to the day-to-day operations of the fund alongside Jaime Salinas of BBVA.

This is the first time Madrid-based BBVA will be managing a fund alongside Darby, although the bank is a lead investor in the mezzanine fund. The two decided to join forces in order to exploit their synergies as active players in the Latin American region, Lastres said. Darby-BBVA Latin American Private Equity Fund is Darby?s third fund targeting the region, following a $150 million private equity fund raised in 1994 and a $125 million mezzanine fund raised in 1999. Over the last decade, BBVA acquired 15 financial institutions in the region and has been involved in the expansion of Spanish corporate investment in Latin America.

Despite the hard economic times that have fallen on the U.S., Lastres said that Latin America is ripe for private equity investment, particularly since it has very attractive asset prices and medium-term growth potential now.

“The asset class has been overlooked because of short-term financial volatility globally, which has affected the region. But still there is some growth potential . . . not straight out of the gate, but you have undeveloped markets in Latin America which will be developing very rapidly with technology and the added competition that is coming in from foreigners and stronger global companies. So it is the right time to be looking at this market.”

Contact Christa Fanelli.