Babcock in play for Irish telco

Babcock & Brown Capital, a fund set up by Australia's second-biggest investment bank, increased its stake to 18 per cent in Eircom Group, Ireland's largest phone company, and said it might make a takeover offer.

The fund led a group that boosted its stake from 12.5 per cent, Sydney-based Babcock & Brown Capital said yesterday. Eircom shares rose 1.9 per cent, valuing the Dublin-based company at €2.3 billion ($4.14 billion).

Eircom offers access to a mobile-phone market where consumers spend about 50 per cent more on calls than in the UK, Germany or Italy.

Babcock & Brown Capital executive director Phil Green is targeting European investments after raising about $2.4 billion since October 2004 for various funds.

"Babcock & Brown Capital are yet to invest all of the money raised so we can anticipate further acquisitions," said John Heagerty, an analyst at ABN Amro in Sydney. He said shareholders should add Babcock & Brown, which started and manages the fund, to their portfolios.

Europe's phone market has seen a wave of takeovers in the past year, including Telefonica's £17.7 billion ($46.7 billion) purchase of the UK's O2 and the leveraged buyout of Denmark's TDC.

Babcock & Brown Capital's talks with Eircom come two months after a failed takeover attempt for the Irish phone company by Swisscom, Switzerland's largest phone company.

Swisscom ended talks to buy the Irish company in December after the Swiss government, which owns 66 per cent of Swisscom, banned the company from making foreign acquisitions.

- BLOOMBERG