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Volksbank sells Darby mezzanine fund stake

Darby Converging Europe Mezzanine Fund invested in 16 companies, including Czech solar power company Energy 21.

Österreichische Volksbanken-AG has sold its stake in Darby Private Equity’s Darby Converging Europe Mezzanine Fund, according to a UK regulatory notice.

The limited partner stake was purchased by Zurich-based Alpha Associates. The stake was funded by Alpha Secondary III, an acquisition vehicle that launched in 2012.

Darby Converging Europe Mezzanine Fund was Darby Overseas Investments’ first European mezzanine fund. The 2005-vintage fund raised €214 million, shy of its €300 million target, according to PEI’s Research and Analytics division. The California Public Employees’ Retirement System is also an LP in the fund.

The fund invested in 16 companies and has divested eight companies. Remaining investments include Bulgaria Telecom, Turkish food processing company Flour Milling Company and Czech solar energy company Energy 21, according to Darby’s website.

In May 2013, Darby exited its equity and mezzanine stake in Turkish bottled water and beverage manufacturer Sirma. The firm did not disclose the size of the transaction, although managing director Burak Dalgin indicated the deal had generated an internal rate of return of at least 20 percent, Secondaries Investor’s sister publication Private Debt Investor previously reported.

Darby Converging Europe Mezzanine Fund was generating a net IRR of -4.5 percent and an investment multiple of 0.8x, as of 31 December 2013 according to CalPERS website. Darby declined to comment.

Alpha acquired the Darby fund stake by purchasing a private equity portfolio from Volksbank. Earlier this month, Alpha also acquired stakes in Accession Mezzanine Capital I and II from the Vienna-based bank.  The firm declined to comment.

Volksbank itself announced the sale of a €110 million private equity portfolio, including private equity fund investments and direct investments in German-speaking and Eastern European countries. The portfolio was sold in several tranches, the first occurring at the end of 2013.

“We are very pleased with the progress of the restructuring process. It is run by a group of specialists in a highly professional and determined way and we are working efficiently to meet the requirements of the European Commission. Therefore, we are currently well ahead of the original plans”, VBAG chief executive officer Stephan Koren said in the statement.

It is unclear if Alpha’s purchases are part of the portfolio and Volksbank was unavailable to comment by press time.