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Babcock & Brown raises $1.2 billion for European fund

Danny John
December 4, 2007

A GROWING appetite among European banks and pension funds for infrastructure funds has seen the asset-hungry Babcock & Brown raise nearly $1.2 billion more than it planned for its new specialist investment vehicle.

In a move that follows the launch of the rival Macquarie Group's third such European-based fund, B&B yesterday closed the final round of the cash-raising exercise for its first regionally focused unlisted trust with commitments of 2.17 billion ($3.6 billion).

That was 600 million more than the revised target that B&B set in July after investors originally soaked up a first offering of 1.35 billion when the fund was first closed in May.

B&B, which has targeted Europe as the fourth part of an expansion strategy that takes in the US, Asia and Australia, moved to top up its new European Infrastructure Fund after committing 590 million of the original investment towards a 10 per cent stake in Portugal's largest toll-road operator.

The shareholding in Brisa, a Lisbon-listed company that controls half of the country's motorway market, has formed the cornerstone investment in the fund, which is now on the lookout for further interests in the transport, water and energy sectors.

Antonino Lo Bianco, the group's European head of infrastructure, said yesterday: "There is a wealth of high-quality investment opportunities in Europe and we are confident [we] will create a portfolio of carefully selected assets that will deliver strong returns for our investors."

A B&B spokeswoman said all the securities offered in the new fund were picked up by regional institutions that were sitting on piles of surplus cash.

B&B has recruited dozens of deal-makers working out of offices across Europe including London, Paris, Rome, Munich, Madrid and Dublin to scour the region for potential assets to be injected into the new fund.

The group's experience in attracting European-based backers matches that of Macquarie, whose first infrastructure fund was dominated by North American, Asian and Australian investors but whose second unlisted vehicle attracted 80 per cent of its cash from continental groups.

An even higher proportion of local investors is expected to take up the 5 billion offer that is being sought by the Macquarie European Infrastructure Fund III.

While the successful fund-raisings have underlined the demand for such investments, they have also fuelled the fierce competition for infrastructure assets to feed their funds.

Macquarie and B&B are just two of the Australian players active in the European industry, with AMP, Colonial First State and Challenger all bidding to acquire similar assets.