Lead Manager

BABCOCK & BROWN PROSPECTUS
2.2 PURPOSE OF THE OFFER
The purpose of the Offer is to:
• Provide additional capital to facilitate long term value creation arising from principal-related and investment
management activities
• Facilitate access to the public equity and corporate debt markets, further increasing Babcock & Brown’s
access to capital and reducing Babcock & Brown’s cost of capital
• Allow investors to participate in the long term value creation across all Babcock & Brown Business Groups
• Provide additional means with which Babcock & Brown can make acquisitions and reward employees
2.3 OFFER PROCEEDS
The net proceeds of the Offer will be applied to the ongoing business and expansion of the Group as referred to
below. Expenses of the Offer will be met via the funds raised.The use of Offer Proceeds is summarised below.
SOURCES AND USES OF PROCEEDS 1
$ million
Gross IPO proceeds 550
Less: IPO costs not expensed (27)
Less: Debt repayment 2 (120)
Net Offer Proceeds available for deployment 403
NOTES
1.To the extent cash in the 31 December 2003 pro-forma balance sheet has been used to fund investments during 2004, the IPO proceeds may be used to meet
liabilities incurred since 31 December 2003 including liabilities in respect of the distributions referred to in Section 5.3.2.4.
2. Debt repayment comprises the repayment of $120 million of debt facilities drawn down at 31 December 2003.Total debt repayments may also include
repayment of liabilities incurred since 31 December 2003 including additional drawdowns used to fund investments during 2004.
The Forecasts assume that the Group will have excess cash of approximately $185 million as at 31 December
2005.This excess cash is not required to support the activities of the Group. Management currently anticipate
that the excess cash will be fully deployed into new investments during 2006.
Going forward the Group should be able to recycle capital from the sale of existing investments and to obtain
additional capital from corporate debt facilities.
Many of Babcock & Brown’s successful investments have been made on an opportunistic basis, often taking
advantage of dislocations in markets in which it operates. Babcock & Brown intends to continue to invest in such
situations going forward, which could be one potential use for the additional capital that is not included in the
above analysis.The Group has historically made several opportunistic investments each year, although there is no
guarantee that such situations will be consistently available in the future.
The availability of additional capital should also allow Babcock & Brown to increase its focus on strategic
acquisitions to build its investment management business and associated fee streams, with the aim of creating a
larger base of annuity-style revenues.
Following the IPO, the Group will have sufficient working capital to pursue its stated objectives.
27