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Buyout baron Henry Kravis is believed to be running the slide rule over a possible bid for Babcock & Brown, the heavily indebted Australian conglomerate.
Babcock's wide range of interests include real estate advisory and infrastructure work, and it was part of the consortium that last week bought Angel Trains from Royal Bank of Scotland.
It also has investments in wind, solar and gas-fired power generation and public-private partnership projects around the world.
New York-based Kohlberg Kravis & Roberts (KKR) has contacted sector specialists to find out more about the Sydney-listed Babcock.
It is rumoured that HSBC has done the same.
The company has been in freefall for the past year, with its Friday closing share price of A$6.42 ($8.05) barely one-sixth of its A$34.28 52-week high, valuing it at A$2.5 billion.
The share price decline was fuelled by investor fears that Babcock relies too heavily on debt in the credit crunch age; it is also a complicated business for shareholders to understand.
Its A$2.8 billion loan facility will be reviewed by its banks should the share price not recover from recent lows because of a market capitalisation clause in its corporate debt facility.
But Phil Green, Babcock's chief executive, said last week that: "We will move as quickly as possible to restore investor confidence in a decisive yet orderly manner."
An infrastructure industry source said KKR is interested in Babcock & Brown because it wants to invest money it is raising for a global infrastructure fund, announced by the private equity giant last month.
A source close to Babcock admitted that many potential suitors are likely to be looking at the company due to the size of the fund.
However, the source insisted that a private deal is unlikely as the 1400 staff own 40 per cent of the company.
"That's a pretty massive hurdle. Staff would tend to stick with the company, and they would believe the market is undervaluing Babcock," he said.
Babcock, which along with KKR declined to comment, would be valued at close to the US$1 billion ($1.3 billion) to US$1.5 billion price that Land Securities looks set to get for Trillium, a peer.
The Trillium deal has also taken a new twist, as Goldman Sachs' Whitehall fund has withdrawn its independent bid and teamed up with William Pears-owned Telereal and Australian bank Macquarie.
Final bids for Trillium are due at the end of this week.
- INDEPENDENT
