Babcock & Brown in administration - BBPP not affected

Babcock & Brown has told the Australian Stock Exchange that it is in voluntary administration – and that news has prompted a quick response from Babcock & Brown Public Partnerships (BBPP), pointing out that it is alive and well despite its former parent’s demise.

BBPP floated free in November 2006 when it took its own listing on the London Stock Exchange.

BBPP is an important player in the PFI equity market in the UK.

When launched, it raised £300m. Its seed assets included 22 PFI equity stakes already owned by its parent, Babcock & Brown. These were transferred to BBPP’s ownership for £187m.

Soon after, five more transactions brought BBPP’s portfolio up to 30 assets in all with the price of those deals virtually eating up the remainder of the funds available from the IPO [i.e. the flotation].

BBPP told the London Stock Exchange this morning: “The company has noted the announcement made in Australia overnight by Babcock & Brown Limited (BBL) that it has entered into voluntary administration.

“This event is not expected to impact the company.

“BBL is a holding entity only. The administration does not extend to the main operating company in the Babcock & Brown group or to any of BBL's other subsidiaries.

“The board has in place contingency plans to ensure the company receives the long-term support and benefit of the existing 30-strong portfolio management team who are dedicated to the operation of BBPP regardless of any actual or possible future corporate events that may affect BBL or any of its subsidiaries.

“The board's priority remains the maintenance and enhancement of value for BBPP shareholders.”

BBPP has financial independence from Babcock & Brown.

“It has no loans with or shareholdings in Babcock & Brown or any other Babcock & Brown managed fund,” said the London Stock Exchange statement by BBPP.

“Events affecting Babcock & Brown in Australia have no implication for the strategy, direction and operation of BBPP, all of which have remained consistent since IPO.”

BBPP will pull its own annual results for 2008 out of the proverbial bag on 30 March.

“A comprehensive business update” can be expected at that time.

BBPP’s portfolio of PFI equity stakes has pushed out from the UK and into Australia, Belgium, France, Ireland, Canada and Germany.

It sees several newer markets such as Canada, the USA, Germany, France and Belgium as potentially attractive.

Its preferred option is to hold a majority share of the equity as, in most cases, the plan is to hold the equity for the whole life of the concession “which gives us a significant level of influence over the asset’s operations” said Bianca Francis, chief operating officer.

Francis recently told CJ: “We’re not a trader and we’re not selling PFI equity on as we see ourselves as an asset manager.

“To confirm our position, you should know that we have 420 executives out there looking for opportunities so we can afford to be patient and wait for the right opportunities.”