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KKR Eyes Australia's Babcock & Brown: Report

Topics:Mergers & Acquisitions | Private Equity | Australia & New Zealand

By: Reuters | 22 Jun 2008 | 07:40 PM ET

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Kohlberg Kravis Roberts, a U.S. private equity firm, is looking at troubled Australian investment group Babcock & Brown, the UK's Independent on Sunday reported.

Citing an infrastructure industry source, the newspaper said KKR had contacted sector specialists in Sydney to find out more about Babcock. "It is rumoured that HSBC has done the same," it added.

The source told the paper KKR was interested in Babcock because it wants to invest the money it is raising for a global infrastructure fund, announced last month.

Shares in Babcock and its associated funds have tumbled this month on debt concerns, leading to speculation it may be forced into asset sales to raise capital.

Babcock's shares have fallen to a level below which lenders can call for a review of the group's A$2.8 billion ($2.7 billion) three-year debt facility.

In a separate report, the Sydney Morning Herald paper reported on Monday that Babcock's Infrastructure arm was considering bringing in outside financing to help fund a 335 million pound ($657 million) port project in the UK.

In an unsourced report, the paper said Babcock & Brown Infrastructure might look to partner with a shipping line in developing a deep-sea container facility at Teesport, northeast England.

Another report, in the Australian Financial Review, said on Monday that Babcock might want to offload its 37 percent stake in unlisted oil and gas firm Coogee Resources.

Babcock invested $232 million in Coogee last year and has seen the value of that investment rise sharply in line with soaring energy prices, the paper said.

Coogee is about 60 percent owned by the Perth-based Martin family. Coogee Chairman Gordon Martin told the paper the family had no plans to sell out of the company.

Some banking sources said Babcock might prefer to hold its Coogee stake until the group's main project, the Montara field off western Australia with estimated reserves of 36.9 million barrels, comes into production. That is slated for December.

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