Brookfield to deploy new equity by Q1 2010

The Canadian asset manager’s infrastructure fund plans on using all of the $572m it raised in a public equity offering to fund its recapitalisation of Babcock & Brown Infrastructure. Management said the money will be put to work before March of next year.

Fresh from raising $572 million in a public equity offering, Toronto-based Brookfield Infrastructure Partners (BIP) plans to deploy all of its new capital by March 2010, BIP’s executives said during a conference call with analysts.

Brookfield: raising money to
buy Babcock assets

The money was raised to fund BIP’s portion of the A$1.8 billion  (€1.1 billion; $1.6 billion) recapitalisation of Babcock & Brown Infrastructure. As part of that transaction, Brookfield Asset Management, the manager of BIP, and its affiliates have an opportunity to invest approximately $945 million to acquire a 40 percent interest in Babcock & Brown Infrastructure and take direct stakes in some of its flagship assets.

Asked by BMO Capital Markets Analyst Peter Sklar whether BIP had “over-equitised,” or raised more money than it needed, John Sitinebaugh, BIP’s chief financial officer, said the capital raising was “sized” to fund only the Babcock deal.

He added that all the equity raised will be deployed by March 2010.

Denis Couture, a spokesperson for Brookfield, said that more details about the transaction, including the precise equity contributions to the deal from BIP and Brookfield Asset Management, will become available after 20 November. That’s when Babcock’s shareholders will meet to vote on whether to approve the transaction.

In related news, BIP said it earned adjusted net operating income of $12.1 million for the quarter ending 30 September 2009, compared with $13.1 million for the same period last year. BIP said the results were driven by a weak price environment for logs in its timber business. Its Chilean electricity transmission business, Transelec, fared better, posting a 20 percent increase in adjusted net operating income for the quarter.

BIP is 50 percent owned 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.