- The Washington Times - Thursday, August 2, 2001

Former Treasury Secretary Nicholas F. Brady raised a few eyebrows when he predicted a strong economic recovery in 1992 based on "light-bulb accumulation" and the condition of tires on the nation's cars.

Mr. Brady's method of economic forecasting never caught on, even though the nation's gross domestic product shot up 4.8 percent in the fourth quarter of 1992, six months after he predicted a rebound.

Mr. Brady, President George Bush's Treasury secretary, is at it again.

Darby Overseas Investments Ltd., a D.C. company founded by Mr. Brady to invest in companies in emerging markets, said this week it plans to start a new company to invest in Latin American technology companies.

The region is widely viewed as being in financial peril. But Mr. Brady like he did in 1992 when talking about the U.S. economy says it is poised for an economic comeback.

"We have always found that the time to start something is when times are tough," said Mr. Brady, 68.

The newly formed Darby Technology Ventures Group will begin by investing in software, infor-mation-technology, wireless-telecommunications and Internet-infra-

structure companies. In some cases it will form the companies, and in some cases it will invest in existing companies. It will invest in U.S. companies doing business in Latin America and in companies founded by Latin Americans.

Darby Technology Ventures expects to have made some investments within three months.

The software, Internet and wireless industries provide substantial opportunity for emerging companies in the region, Darby Chief Executive Richard H. Frank said.

With a lagging Latin American economy, negative attitudes about the economic climate there are distracting attention from potentially lucrative investments, Mr. Brady said.

"The last decade has seen substantial economic growth and modernization in the major economies of Latin America," he said. "The next phase of the region's growth will require large-scale investment and innovation in new technology."

Mr. Brady and Mr. Frank declined to disclose the size of the new company's initial capitalization. But it has enormous equity partners. IBM Corp. and the investment arm of Comcast Corp. are joining Darby in its Latin American venture.

Richard Birney, vice president of venture investments at IBM, and Julian Brodsky, head of Comcast Interactive Capital, will sit on the Darby Technology Ventures Group board of directors.

Comcast Interactive Capital, started in 1999, is a $350 million fund that has made 47 investments in North American businesses. IBM doesn't have a venture fund, but it has invested about $340 million in 40 venture-capital firms.

"We're involved because we want to build relationships with the companies Darby invests in. This is a strategic move for us," Mr. Birney said.

Neither IBM nor Comcast has invested in Latin America. Darby Overseas Investments has invested about $250 million in 20 Latin American companies since Mr. Brady founded it in 1994. But none of those investments are in technology companies.

Mr. Brady is not alone in his optimism about Latin America's recovery or the potential for tech companies there.

As proof of the potential for technology and telecommunications to take hold there, he points to the rapid growth of consumer Internet services. AOL Latin America reported having 750,000 Internet subscribers as of May, less than two years after introducing service in the region late in 1999.

AOL Time Warner Inc. harbors a measure of optimism and realism about the business climate there, AOL Latin America President Charles Herington said.

Cycles of crisis because of debt, high unemployment rates and hyperinflation still occur. Argentina is in jeopardy of defaulting on $125 billion of foreign debt.

But foreign investment in countries like Mexico, especially since the election of President Vicente Fox, have helped stabilize some regions, he said.

"The cycles come and go, but they are shorter than they were," Mr. Herington said. "We are optimistic about where these economies will come out."

In addition to investing in Latin American companies, Darby Technology Ventures will open centers in Mexico, Argentina and Brazil to market business services to technology companies.

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