Babcock & Brown, Australia's second-largest investment bank, plans to raise as much as A$1 billion for a new fund, taking advantage of investor appetite for equity investment companies.
The size of the initial public offering was boosted from A$550 million after gauging investor demand, the Sydney-based enterprise said yesterday.
Australians
are increasing investments as the nation's benchmark stock index trades near a record and the economy is in its 13th consecutive year of growth.
Souls Private Equity, the investment arm of Sydney-based Washington H. Soul Pattinson, increased the size of its IPO by a quarter this month to A$125 million to meet investor demand for stock.
This year may be the right time to "launch private capital-related cash boxes", said Jason Teh, who helps manage $3.3 billion at Investors Mutual in Sydney.
"It seems like the hot money is chasing any IPO related to private capital."
In March, Hunter Hall International, a Sydney-based fund manager, increased the amount it raised in an IPO for a new listed investment company by 10 per cent to A$220 million.
The nation's benchmark S&P/ASX 200 index closed at a record 3950.50 on December 6.
The Bloomberg Australian IPO index, which tracks the performance of Australian stocks during their first public traded year, has risen 21 per cent this year.
Babcock & Brown stock was 26c higher at A$10.56 at the close of trade in Sydney.
It flagged the IPO last week.
"Babcock & Brown Capital will be the vehicle through which Babcock & Brown will access larger scale and longer term opportunities," said Babcock executive chairman Jim Babcock.
The firm will manage the new investment company.
The offer is open to institutions and clients of UBS, Tricom Equities and Wilson HTM, who are managing the sale.
Details of the offer will be available in the next two weeks.
Babcock & Brown, which has 430 workers in 19 offices in North America, Europe, Africa, Asia and Australia, listed on the Australian Stock Exchange in October.
It owns energy assets through its stake in companies such as Prime Infrastructure Group.
- BLOOMBERG
