Darby Overseas Investments, Washington, D.C., is nearing a final close on its first mezzanine infrastructure fund dedicated to Brazil, a source familiar with the situation told Buyouts. The size of the fund, earmarked for investments in power, transportation, telecommunications, and water, could not be determined, but the firm expects to announce details in the coming weeks.
The fund is Darby Overseas Investments’s first mezzanine fund dedicated to a specific country. Previous funds include its $195 million Darby Latin American Mezzanine Fund LP, closed in 1999, and the $246 million Asia Infrastructure Mezzanine Capital Fund LP, which the firm purchased from Prudential Asia Infrastructure Investors Ltd. in 2003.
The new fund, called Darby Brazil Mezzanine Fund LP, is the first of its kind committed to infrastructure. The firm launched the vehicle in response to increased demand from local investors, and the fund is denominated in local currency. With the dedicated fund, Darby Overseas Investments plans to directly invest in and manage Brazilian infrastructure projects and companies.
The amount of investment in Brazil remains small when compared to the money pouring into Russia and Asia, according to our source. However, that’s changing as investors realize Latin American countries possess the same dynamics and characteristics as fellow BRIC countries Russia, India and China: deep local markets, rich natural resources, and a strong potential for growth.
Darby Overseas Investments is a subsidiary of Franklin Templeton Investments. The firm, which does not use placement agents for its fundraising, tapped Fernando Gentil, a former executive at insurance giant Swiss Re, to head the fund. Additionally, Diane Smith, a former managing director with Electra Investment Trust, joined Gentil’s Brazil mezzanine finance team last month. Under Gentil, Darby also plans to launch Latin America Private Equity Fund III LP, according to the firm’s Web site.—E.G.