Lead Manager

SECTION 3
BUSINESS OVERVIEW
BABCOCK & BROWN PROSPECTUS
that ASML’s goal was to provide a more affordable solution via leasing in order to decrease the cost per
wafer start in the factory, while allowing the flexibility for customers to migrate from one generation to
the next seamlessly.
BBEM is working directly with ASML and, in consultation with ASML’s customer base, has developed a
“refresh lease” which allows the lessee to acquire multiple generations of ASML tools over an extended
lease term, thus benefiting from both BBEM’s financial capabilities and its ability to redeploy the surplus
assets. Babcock & Brown believes that ASML would benefit from converting such used equipment into
new sale opportunities.
In addition, BBEM has worked for the last 12 months to create a sophisticated asset-scoring
methodology, similar to a traditional credit-scoring process. This methodology provides investors with a
quantitative valuation model to forecast the future residual and collateral value of the equipment under
the portfolio management of BBEM.
Future growth
Expand business through increased investment in existing activities
Each of the Business Units within the Operating Leasing Group is currently experiencing improving operating
conditions given the general upturn in demand for aircraft, railcars and semiconductor manufacturing equipment.
The Operating Leasing Group aims to take advantage of these advantageous conditions through increased growth
of the leased asset portfolios with the objective of securing ongoing management and remarketing fees.
There may also be opportunities to acquire substantial asset portfolios as they are sold by owners who no longer
view operating leasing as a core activity, particularly in the aircraft and rail sectors.
Establish vehicles to extend principal investment activities
Despite generally improving market conditions, there remain market inefficiencies that provide value arbitrage
opportunities in selected niches of the Group’s focus areas.The Operating Leasing Group intends to take
advantage of these opportunities.
Product innovation
One key to the Operating Leasing Group’s success has been its ability to create and apply innovative financing
structures and leasing products that give it a competitive advantage.The business will continue to innovate in
response to changing market conditions to maintain its leading edge.
Geographic expansion
BBRM and BBEM expect to continue to take measured steps to expand the geographical reach of these business
areas over the medium term. For BBEM, this is expected to primarily involve expanding its marketing network,
while for BBRM this will involve establishing beachhead operations such as the recently established European
operating leasing business.
Diversify operating leasing activities to related product areas
The Group may extend its activities to related asset classes over the medium-to-long term.These could include:
• BBAM: Ordering new aircraft directly from manufacturers, engine leasing and freighter conversions
• BBRM: Intermodal equipment and locomotives
• BBEM: Complementary markets including healthcare, radiology, diagnostic equipment and life sciences
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