When Nicholas Brady left the US treasury department at the end of the Bush administration, it was something of a no-brainer to figure out what to do next. Why not invest in the Latin American countries that his work in developing Brady bonds had helped get on the track to privatization? Starting up in 1994, his company, Darby Overseas Investors, raised $150 million for a private equity fund, one of the first of its kind for Latin America.
Now that private equity has become more common in Latin America, Darby has turned its innovative talents towards launching another first: a $500 million mezzanine fund, which got an initial $75 million loan from the Inter-American Development Bank. According to sources close to Darby the firm signed on Banco Bilbao Vizcaya as a core sponsor and another signing of a European bank was thought to be close.
The mezzanine fund was the brainchild of Richard Frank, Darby's managing partner and chief operating officer and the former managing director of the World Bank and chairman of its private sector development group.
The fund's aim is to provide long-term debt for infrastructure projects, just the type of finance that is often in short supply in the region.