$250m fund float to ease pain of NZX departures

Australian-listed investment bank Babcock & Brown is to float a $250 million infrastructure investment fund on the NZX, easing the pain of a recent raft of departures from the exchange.

According to sources familiar with the plan, the fund will be listed within the next two to three months and will invest in New Zealand and Australian infrastructure such as utilities and roads.

Babcock & Brown hopes the fund will return a high cash yielding of as much as 9 per cent a year in addition to capital growth. The cash returns will be fully tax credited.

Babcock & Brown last night declined to comment.

The high yield of the fund may take advantage of investor wariness for finance company debenture stock. Demand for these securities has taken a hit over recent weeks since the collapse of finance companies such as National Finance and Provincial Finance.

The deal, to be managed by Goldman Sachs JBWere and Forsyth Barr, will be welcomed by the New Zealand Exchange. Only yesterday entrepreneur Eric Watson disclosed plans to take his PRG group private. Meanwhile, Feltex could still leave the exchange. These departures follow losses such as Waste Management and Carter Holt Harvey.

Other floats in the wind include the miner Pike River Coal, car checking chain Vehicle Testing New Zealand, Greymouth Petroleum and retailer Ezibuy.