Lead Manager

BABCOCK & BROWN PROSPECTUS
Case study Dalrymple Bay Coal Terminal (DBCT)
DBCT is one of the largest open-access-coal-handling terminals in the world, with a net operating
capacity of 56MTA, or approximately 6% of the world’s seaborne coal trade. In September 2001, Babcock
& Brown led a consortium which purchased a 100% leasehold interest in DBCT from the Queensland
Government, with the view to creating a listed diversified infrastructure-investment entity with DBCT as
its foundation asset.
Babcock & Brown syndicated the majority of its expected principal position during the bid process for
DBCT. Shortly after the financial close of the DBCT acquisition, Babcock & Brown had completed the
partial selldown of its equity stake to a group of private equity investors.
In June 2002, nine months after the acquisition of DBCT, Babcock & Brown successfully led and
completed the IPO of Prime Infrastructure on the ASX with DBCT as its foundation asset. A Babcock &
Brown subsidiary continues to act as the Responsible Entity for the Prime Infrastructure Trust and also
acts as Prime Infrastructure’s financial advisor. Moreover, Babcock & Brown remains a significant stapled
security holder and, with its associates, has undertaken to hold a minimum of 20 million stapled
securities until 2006.
PFI/PPP
PFI (Private Finance Initiative) or PPP (Public Private Partnership) projects are those where the public sector
commissions private sector participants to provide services to the public sector which include building, financing
and operating various forms of infrastructure before, in most instances, transferring operations to the public sector
after a pre-agreed period, typically 25 years and in some cases up to 35 years.The government typically pays a
pre-determined fee (often subject to an agreed formula) over the period of time that the private sector provides
the agreed services.
The long-term cash flow streams generated by these assets, backed by government credits, lend themselves to the
types of asset financing techniques in which Babcock & Brown has considerable expertise.
Babcock & Brown has developed a specialisation in smaller-sized accommodation-based PFI/PPP projects such as
schools, prisons, courts and police stations, where revenues are not subject to patronage risk (in contrast, revenues
for a toll road, for instance, depend on usage levels by commuters). A dedicated team was formed in the UK in
1997 to focus exclusively on such projects.The Australian Infrastructure Group also is an active participant in the
emerging Australian PPP market.
Babcock & Brown acts as the leader of a consortium of construction firms, architects, facilities managers, financiers,
lawyers and other partners. Babcock & Brown’s typical role in the development is to structure the bid, arrange
finance and negotiate operating agreements with the government and other operating partners. In general,
Babcock & Brown receives development fees upon financial close of each project. Post-acquisition, Babcock &
Brown will typically oversee all development activities and then in most cases acts as investment manager on behalf
of equity providers. Babcock & Brown also frequently takes a principal equity position in the project.
To date, Babcock & Brown has developed 13 projects in the UK with total gross development value of
approximately £418 million.Three additional PFI projects with a development value of £260 million are at a
preferred bidder stage and are expected to reach financial close in the forecast period. A further pipeline of
developments is in the initial bid stage.
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