Babcock & Brown

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What is it?

Australian-headquartered Babcock & Brown is a global alternative asset manager specialising in sectors such as infrastructure, energy and real estate. It has about 1,500 employees worldwide and manages about AU$72bn in infrastructure assets.

What's it got to do with the financial crisis?

Babcock & Brown operates like a mini version of fellow Aussie firm Macquarie by buying assets such as ports and utilities and then bundling them into listed and unlisted funds from which it earns management fees.

The credit crunch put Babcock's high-debt operations under severe stress by making it more difficult to raise funds to service debt. Concerns about its business model sparked a 90% slump in B&B's share price between January and August 2008.

These troubles cost chief executive Phil Green his job. He stood down in August 2008 as the firm unveiled a major overhaul of its board and management team after posting a 30% cut in its half year net profits to AU$175m.

Babcock and its satellite funds are now trying shrink their businesses and sell assets, to boost their balance sheets. One of these funds, Everest Babcock & Brown Alternative Investment Trust, has revealed plans to de-list from the share market because of a widening gap between its share price and asset value.

In August 2008, B&B said it planned to gradually wind down its corporate and structured finance division as part of a wide-ranging review.

Last updated 26 September 2008.

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