Darby Does Dresdner Deal

Dresdner Kleinwort continues to sells off its private equity goods in the secondary market. Last week, Darby Overseas Investments became Dresdners latest buyer when it announced that it purchased the general partnership of the Dresdner Kleinwort Benson Emerging Europe Fund.

The price of the transaction was not disclosed. The Dresdner fund closed in 2000 with capital commitments of $220.6 million. Its limited partners include the California Public Employees Retirement System and Dresdner Bank.

Under terms of the secondary sale, Darby will assume management of the existing portfolio, which includes companies in biotech; computer software and services; and consumer and health care sectors in Central Europe. The fund has focused primarily on the European countries of the Czech Republic, Hungary, Poland and Slovakia. Darby has allocated an unspecified amount of capital for follow-on investment.

The fund had as many as 10 investment professionals at the time of its close, according to Thomson Venture Economics (publisher of PE Week). But only three, Marek Jakubczyk, Nicholas Kabcenell and Leszek Muzyczyszyn remained to join Darby. They are based in Budapest, Vienna and Warsaw.

The trio join existing Darby partners Johan Bastin, who is based in Vienna and who came to Darby in 2003 to jump start the firms presence in Central and Eastern Europe; Robert Graffam, who heads the investment team and will relocate to Vienna, Patrick Cleary; and Nelson Oliveira, who will remain in Washington, D.C.

Dresdner Kleinwort has been reducing its private equity holdings. Reuters reported in January that the German bank is in negotiations with U.S. secondary buyers to sell private equity assets worth more than $1 billion. Dresdner declined to comment on its secondary sales. But last year, Dresdner closed a $90 million deal with Coller Capital for a 22-company venture portfolio. The deal was a management spinout with former Dresdner investment professionals managing the assets independently as Annex Capital, with Coller serving as a limited partner.

Dresdners latest sale gives Darby a foothold in Central Europe. The firm has been active in Asia and Latin America, particularly in mezzanine and buyout markets. Darby Overseas Investments was founded in 1994 and has $500 million under management. It is a subsidiary of the San Mateo, Calif.-based Franklin Templeton Investments, an investment company with more than $402 billion under management.