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Babcock & Brown Aims to Raise A$550 Mln in Share Sale (Update4)


July 22 (Bloomberg) -- Babcock & Brown LP said it aims to raise A$550 million ($391 million) in an initial share sale and move to Sydney from San Francisco, becoming Australia's second- largest investment bank after Macquarie Bank Ltd.


``All executives agree that a listing on the Australian Stock Exchange is the most logical and appropriate course as the group seeks to expand its capital base,'' Jim Babcock, executive chairman of the company, said in a statement.


Babcock & Brown is targeting Australia to gain business in Asia's fastest-growing investment banking market. Fees from underwriting securities and advising companies in Australia and New Zealand surged 49 percent to $1.21 billion in 2003, according to New York-based consultancy Freeman & Co. Australia and New Zealand accounted for 19 percent of Asia's total fees from underwriting and advising companies in takeovers.


``Babcock has been active and successful in the Australian market,'' said Robert Patterson, who holds A$129 million of Macquarie Bank shares at Argo Investments Ltd. ``We'll certainly have a look at the IPO.''


Babcock & Brown, which is 20 percent-owned by Munich-based HVB Group, has 430 workers in 19 offices in North America, Europe, Africa, Asia and Australia. The bank, with businesses including real estate, infrastructure, leasing, structured finance and fund management, will hire Australia-based non-executive directors before listing on the exchange within six months, it said.


Plans to Expand


Babcock & Brown's management and HVB, Germany's second- largest bank by assets, won't sell stock into the share sale, which will raise capital for expansion, the company said. HVB paid A$164 million for its stake in Babcock & Brown in 2000.


``Our business has diversified significantly over recent years, but our current capital base is a constraint,'' said Managing Director Phillip Green.


Babcock & Brown, founded in 1977, will have a market value of about A$1.5 billion after the sale, which will be managed by UBS AG, people familiar with the sale said last month.


The company's Australian unit has a 13 percent stake in Prime Infrastructure Group, the owner of the nation's second-largest coal-export terminal, and a 19.9 percent stake in Commander Communications Ltd. The Australian operation accounts for a third of the group's sales and more than half its capital.


Investor Demand


In 2002, Babcock & Brown sold A$285 million of shares in its Prime Infrastructure business, taking advantage of investor demand for infrastructure funds.


The Bloomberg Australian IPO Index has risen 14.2 percent this year, more than double the gain in the benchmark S&P/ASX 200 Index.


Still, in May, Bradken Ltd.'s planned initial share sale became the second in Australia to be canceled in a week after its owner failed to attract high enough bids for stock in the nation's largest combined foundry and heavy engineering group. Buyout firm Catalyst Investment Managers Ltd. decided against a share sale of B&D Doors, Australia's largest garage-door maker.


Since then, AMP Ltd., the nation's largest life insurer, and Macquarie Bank raised A$266 million in an initial sale of shares in Diversified Utility & Energy Trusts, or DUET, after selling securities at the top of an indicative price range.


``It seemed the IPO market was just getting back on its feet,'' said Argo's Patterson. ``But I think the market's focus will turn to earnings, rather than IPOs, as we move into the profit reporting season next month.''


Pacific Brands Ltd., Australia's largest maker of underwear, raised A$1.26 billion in March, and Zinifex Ltd., a zinc miner, raised A$960 million a month later, in the nation's biggest initial share sales this year.


Sydney-based Macquarie Bank, the only investment bank to disclose fees in Australia, earned A$364 million of fees from advising companies and underwriting securities in the year ended March 31. Australian companies sold $48 billion of shares and completed $236 billion of takeovers since 2000, Bloomberg data shows.




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MBL was one of my 'must haves' when I first started share trading! I bought in at $32 a few months ago, then during the March purge sold at $47. Regretted that decision every day until I bought in again at $51 (when they announced all their 'giveaways' in maybe June 05?) and havent looked back since!
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