Lead Manager

SECTION 3
BUSINESS OVERVIEW
Future growth
Expand investment in renewable energy
Babcock & Brown has developed a pipeline of potential wind energy and gas-fired power developments and
other infrastructure opportunities in Australia, Europe and the US which are anticipated to require a capital
commitment of over $100 million during the Forecast Period. Global government-supported initiatives to
increase the development of renewable energy sources should result in further development and investment
opportunities in the medium-to-long term.
Increase capital deployed in investments
Like the Real Estate Group, the Infrastructure and Project Finance Group has traditionally syndicated most of its
investment positions. For instance, Babcock & Brown only retained a 13.5% stake in the DBCT investment
which has provided initial wholesale investors with an IRR in excess of 66% per annum when calculated by
reference to the market value of Prime Infrastructure stapled securities as at 31 July 2004.
Following completion of the Offer, the Infrastructure and Project Finance Group intends to selectively hold
for longer periods of time, more-significant positions in its investments, while continuing to build its investment
management business by syndicating the remaining positions to private investors or to investment vehicles it has
established.
Create additional investment products based on infrastructure assets
The long-term, stable cash flow streams generated by many infrastructure assets are attractive to superannuation
and other retirement-focused funds seeking secure, long-term investments.These sources of capital are growing
due to the worldwide trend towards self-funded retirement and an ageing population. Babcock & Brown sees a
significant and growing opportunity to use its capital to secure assets which can be incorporated into widely
distributed and/or listed investment products.
Continue development of the Asian Infrastructure and Project Finance business
Strong economic growth in Asia’s economies is expected to drive robust demand for infrastructure development
over the medium term.This trend should support the continued growth of Babcock & Brown’s Asian
Infrastructure and Project Finance advisory practice. Furthermore, the Infrastructure and Project Finance Group
is actively reviewing potential principal investment opportunities in this region.
Financial summary 1
Year ended 31 December ($000) 2001A 2 2002A 2 2003A 2004F 2005F
Net Revenue
– Advisory 28,267 56,678 71,957
– Investment management 23,570 25,174 39,904
– Principal invested 32,514 22,258 44,857
Net Revenue 42,744 69,456 84,352 104,111 156,717
Operating costs 3 (30,405) (32,309) (35,223)
Operating profit before bonuses 53,947 71,802 121,494
NOTES
1.All amounts in foreign currencies for historical financial information in 2001-2003 and forecast financial information for 2004 and 2005 are translated at
constant exchange rates based on the rates assumed for the 2004 Forecasts. Prior to the Offer, the Group managed its activities with US dollars as its benchmark
currency. Historical financial information has been prepared from statements prepared in US dollars.The use of constant exchange rates, whilst not consistent
with Australian GAAP, has been adopted in the table above and in the Business Overviews in Section 3 of this Prospectus, as Babcock & Brown believes that
this basis provides a more meaningful insight into the activities and financial performance of Babcock & Brown given the prior practice of managing its
activities using the US dollar as its benchmark currency.
2. Babcock & Brown did not segment revenues or operating costs by Business Group prior to 2003.
3. Includes operating costs attributable to the segment and allocated corporate overhead costs.
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