Babcock & Brown Wind Partners to buy back management agreement

In proposing to do so, it becomes the third Babcock & Brown satellite fund to take steps to internalise its management since the Sydney-based infrastructure specialist announced a strategic review of its business lines in June.

Babcock & Brown Wind Partners has submitted a proposal to Babcock & Brown to terminate its management agreement with the firm, which is currently selling off assets and non-infrastructure business lines in an effort to pay down A$3.1 billion (€1.5 billion; $2 billion) of debt.

In doing so, Babcock & Brown Wind Partners becomes the third Babock satellite fund to take steps to buy back its management agreement from Babcock since the firm announced a strategic review of its business lines in June. 

Babcock & Brown Wind Partners did not disclose the total cash consideration for the buyback, but said in a statement that it would represent fair value.

On 10 November, Babcock & Brown Capital announced plans to bring management in-house in exchange for A$32.5 million. Earlier, Babcock & Brown Communities also announced plans to buy back its management agreement for A$17.5 million in connection with listed property developer Lend Lease’s proportional takeover of the firm.

If the proposal is successful, Babcock & Brown Wind Partners’ management team, which is currently employed by Babcock, would continue in their current roles and become employees of Babcock & Brown Wind Partners. The firm will also buy back certain assets from Babcock & Brown, although it did not provide details.

Babcock & Brown Wind Partners’ lead independent director, Tony Battle, also told shareholders gathered at the firm’s annual general meeting that it plans to change its name as part of an effort to further distance itself from its manager, which is selling off assets and winding down non-infrastructure activities in an effort to pay down $3.1 billion of debt.

Earlier last week, as part of this deleveraging effort, Babcock agreed to sell its interest in a portfolio of Portugese wind farm assets, which it owns jointly with Babcock & Brown Wind Partners. The transaction is valued at €1.5 billion.

Previous negotiations with Babcock & Brown have resulted in reductions to the base fees payable to Babcock, changes to Babcock's exclusive advisory mandate with the firm and the addition of more independent directors to its board, among other changes.

Babcock & Brown Wind Partners shares ended the day up 13.8 percent to close on A$.74.