Babcock & Brown to launch aircraft leasing unit in US, will announce IPO

Babcock & Brown (BNB) has announced plans to launch an aircraft-leasing unit, Babcock & Brown Air Ltd. The new company will make an initial public offering (IPO) worth up to $773 million on the New York Stock Exchange (NYSE). The company has filed a registration statement with the Securities and Exchange Commission (SEC).

The international investment and advisory firm said it would issue common shares in the form of American Depositary Shares (ADSs) between $22 to $24 per share. Babcock & Brown Air will be focused on acquiring and leasing aircraft and other aviation assets.

B&B Air says it intends to use the proceeds of the offering to partially fund the acquisition of an initial portfolio of 47 aircraft from companies managed by Babcock & Brown, or in which Babcock & Brown has an interest.

Babcock & Brown CEO Phil Green said the launch of B&B Air is a significant step for Babcock & Brown Aircraft Management, part of it's operating leasing division, which has a 17 year global track record in aircraft origination and asset management.

The company also said completion of the IPO would represent the first listing of a Babcock & Brown managed vehicle in the North American market, demonstrating its focus on the diversification of its capital sources

The company noted B&B Air's initial portfolio of 47 aircraft is a high quality fleet with a weighted average age of 5.7 years as of 30 June 2007. Up to 96 per cent of the fleet consists of new generation narrow body aircraft. Its 29 lessees are spread across 16 countries, the group said.

It said the quality of the portfolio should ensure stable revenues and cash flow, which would drive an initial dividend yield of 8.7 per cent, based on the mid-point of the price range.