Babcock & Brown bank seeks Australian listing

CBS MARKETWATCH - March 19, 2004

Babcock & Brown, the leasing and structured finance powerhouse, is reportedly considering an initial public offering within the next 12 months to raise capital to fund its increasing interest in principal investing. Set up in the 1970s by two American tax lawyers, the San Francisco-based bank was a pioneer of leveraged leasing, a method of financing it initially used in the airline industry in particular. Now present in more than 20 countries, it has since established a reputation as a specialist project and structured financing operation.

The listing in Sydney of a niche but well-regarded international financial group would be a coup for the ASX and a boost to government efforts to promote the city as a global financial centre. Only three years ago at the height of the tech boom, Australia was pilloried as an 'old economy' and it feared its capital markets would be marginalised.

Rob Topfer, one of the group's Sydney-based directors, said the bank was considering a listing in Australia, which accounts for up to 30 per cent of its revenues, because its local operations had the greatest need for capital within the group and because the funds would be used to support the expansion internationally of the business model it had developed locally in the past five years.

The bank has increasingly been using its balance sheet to make its own investments. It then either finds partners for the assets or houses them in an investment fund such as Prime Infrastructure, its Australian-listed vehicle.

An IPO will also enable the bank, which operates as a limited partnership and has about 45 directors, to offer share options and a more liquid investment to staff. At present it is 80 per cent owned by staff following the sale of a 20 per cent stake to HypoVereinsbank, the German bank, in 1999, for $120m. Babcock & Brown would become one of only a handful of US-based groups, to list in Australia. With the exception of News Corporation, the US-Australian media giant, the other US companies are mainly small operators in the IT and biotechnology sectors. Sphere: Related Content