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Babcock & Brown (B&B) established the
independent funds management business,
Babcock & Brown Direct Investment Fund
Limited (DIF), to meet the stated wish of major
super funds to assign an increased weight of
member monies to unlisted alternative assets - both private equity and mezzanine debt.
DIF has been established as a stand-alone business to manage a portfolio of unlisted alternative assets sourced from situational anomalies facing corporations, utility operators, and shorter-term ‘active’ property developments.
During DIF’s first years of operation, these assets have been sourced primarily from B&B’s substantial global deal stream. But DIF is not in any way prevented from sourcing assets from third parties other than B&B.
DIF’s return objectives are to deliver in excess of what would be regarded as reasonably achievable (with any consistency over a sufficiently long time frame) by the traditional assets that unlisted alternative investments are expected to replace. Over the past seven years, 203 fully realised deals from B&B’s principal investment practice have generated an average pre-tax internal rate of return (IRR) on capital deployed in excess of 30% net of fees.
DIF’s focus is on delivery of unlisted alternative investment opportunity to institutional superannuation and endowment funds with the capacity to invest not less than the stated minimum for each of the DIF’s trusts:
- DIF I Direct Investment Fund Equity Trust - A$180 million invested - closed to new commitments on 30th June 2007
- DIF II Direct Investment Fund Mezzanine Debt Trust - A$310 million raised and A$290 million invested - open-ended with miniumum commitment at A$10 million
- DIF III Global CoInvestment Fund - A$90m invested - closed to new commitments on 30th May 2008
DIF is, and expects to remain, unlisted.
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