Babcock & Brown to float £300m PFI investment fund on London Stock Exchange

A new name is about to float on the London Stock Exchange – BBPP – and its £300m funds will be exclusively devoted to strengthening its portfolio of equity stakes in PFI and PPP projects.

BBPP stands for Babcock & Brown Public Partnerships and its funds will be split between equity stakes in 22 existing PFI projects, independently valued at £187m, with the £113m balance being earmarked for future projects that are still in the group’s bidding pipeline.

Babcock & Brown is an investment company listed in Australia. It already has a strong presence in the Australian PFI sector. The parent company has so far listed five separate funds, all in Australia, which are comparable to BBPP, the first venture into Europe, three of these being in the Australian infrastructure sector.

In the UK, Babcock & Brown has been the lead player in SPVs to build and operate numerous PFI schemes. The list of projects includes schools, courts, hospitals, police headquarters, an exhibition centre and government offices.

Balfour Beatty has been the SPVs’ selected contractor in most of the UK projects, although others have involved Mowlem, Galliford Try and HBG.

Nineteen of the 22 projects that will be packaged into the new BBPP fund are in the UK. The other three are in Australia, where Multiplex was the builder on two – both are fully constructed.

In the UK, most of the 19 projects are already built. The bulk of the FM contracts have been awarded to Rentokil Initial. “Babcock & Brown is not at risk during the build phase as the build risk is completely passed over to the builder,” said a company spokesman.

“What has happened is that Babcock & Brown has been steadily building up a portfolio spread across a number of individual projects. The total is now being packed into a single entity and this will be floated as a separate entity.”