News & Analysis

Brookfield completes ‘transformational’ Babcock deal

The Toronto-based investor has added $8bn of infrastructure assets onto its books as a result of the deal, a recapitalisation of debt-laden Babcock & Brown Infrastructure. Babcock has re-branded as Prime Infrastructure as part of the deal.

By
Cezary Podkul
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Toronto-based Brookfield Asset Management has completed its A$1.8 billion (€1.1 billion; $1.6 billion) recapitalisation of Babcock & Brown Infrastructure.

Dalrymple Bay Coal
Terminal: now in
Brookfield's portfolio
The deal dramatically deleverages the Australian infrastructure investment firm and gives Brookfield interests in eight new infrastructure assets worldwide.

Babcock & Brown Infrastructure will operate under the name ‘Prime Infrastructure’ and will only be 68 percent leveraged, as opposed to the pre-transaction level of 98 percent.

Brookfield, which invested $1.1 billion in the transaction, owns 40 percent of Prime Infrastructure. Of the $1.1 billion, $940 million came from Brookfield Infrastructure Partners, Brookfield Asset Management’s listed infrastructure investment firm, and the remainder came from Brookfield Asset Management’s balance sheet.

The investment gave Brookfield equity stakes in eight new infrastructure assets, including:

–          NGPL, a natural gas transmission pipeline in the US (11 percent)
–          Powerco, a New Zealand electricity and gas distributor (17 percent)
–          Dalrymple Bay Coal Terminal, a coal terminal in Australia (50 percent)
–          PD Ports, a UK ports business (100 percent)
–          Euroports, a portfolio of port concessions in Europe and Asia (24 percent)
–          WestNet Rail, a 5,000 kilometer rail network in Western Australia (40 percent)
–          Tas Gas Networks, a gas business in Tasmania, Australia (40 percent)
–          International Energy Group, a UK gas business  (40 percent)               

Sam Pollock, chief executive officer of Brookfield Infrastructure Partners, said in statement the deal is a “transformational transaction” for Brookfield, which will have an additional $8 billion of infrastructure assets under management.

Brookfield Infrastructure Partners is 50 percent owned by Brookfield Asset Management and its employees and directors. Besides infrastructure, Brookfield manages property, power generation and other specialty funds, with total assets under management of $90 billion.