News

The CEPU, one of UNI Telecom's Australian affiliates, has several times this year reported in it's E-Bulletins, on the activities of Australian-based private equity group Babcock and Brown, which last year took a major stake in Ireland’s largest telco, Eircom.



As reported in CEPU E-bulletin #22, Babcock and Brown has since been hatching plans to break Eircom up, selling off both its mobiles business and its retail operations. All that the company would retain would be the fixed network infrastructure which would probably end up loaded up with debt.



But now Babcock and Brown (BNB) is itself under attack. A major investor in Babcock and Brown Capital Ltd (BCM) the particular BNB fund that owns Eircom, has said that the fund has performed so badly that it should consider selling up its assets and winding itself up.



The investor, Pendvest, says that since Babcock and Brown Capital (BCM) listed in 2005, investors have made a return of minus 10%. If they had put their money into the Australian stock exchange top 200 companies they would have made a return of 69%.



What’s more, while investors in BCM have been doing it hard, the parent company Babcock and Brown (BNB) has been doing nicely out of the exercise, taking more than $122 million in fees from BCM – or 1.7 times its original investment.



And Babcock and Brown executives have been doing better still. Chief executive Phil Green was paid $17.03 million this year, making him the second highest paid executive in Australia.



Meanwhile, as the money flows up the private equity tree, hundreds of Eircom workers are being made redundant. So if BCM is forced to sell its assets, it might not be such a bad thing for Eircom and its employees.



You can see all the CEPU E-Bulletins at; http://www.cepu.asn.au/comms/section_bulletins/current/bulletin_index.shtml