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Published on October 25, 2007

DMT is an unlisted public company that operates a 21-kilometre elevated tollway in Thailand. The deal will be made through a tender process of existing shares and a private placement of new shares.

The Australian firm's purchase follows the government's September 12 decision to extend DMT's concession for to 2034.

The revised concession also has a pre-agreed toll-rate adjustment schedule. The government was heavily criticised for the extension, which was initiated by the Thaksin government. Reduced traffic on Vibhavadi-Rangsit Road after the opening of Suvarnabhumi Airport and the closure of Don Muang Airport was cited as a reason.

Depending on the response of DMT's shareholders to the tender process, Babcock and Brown's stake in DMT would range from 28-33 per cent. The acquisition is expected to reach a financial close on November 27 and will represent an investment of between 110 million and 130 million Australian dollars (Bt3.38 billion to 3.99 billion).

The investment is intended to be acquired by one or more of Babcock and Brown's managed wholesale funds at or prior to the financial close.

Babcock and Brown has agreed to acquire the existing shares from DMT shareholders. Some notable DMT shareholders include the Finance Ministry, the Panichewa family, a local Thai bank and other international investors.

"This acquisition provides Babcock and Brown with an entry point into the Asian infrastructure sector and a platform to acquire and develop other toll roads in Thailand and in the region," said Peter Hofbauer, global head of infrastructure at  Babcock and Brown.

"Babcock and Brown has been active in Asia for nearly 20 years and currently has 167 infrastructure professionals in the Asia-Pacific region. Through its local presence combined with its expertise and relationships in the infrastructure sector globally, Babcock & Brown is well positioned to capitalise on the increasing number of infrastructure investment opportunities in the Asian region."

Australian Associated Press quoted Shaw Stockbroking analyst David McDonald as saying the proposed purchase showed Babcock and Brown getting even closer to the Macquarie Bank model of infrastructure investment, with diverse assets and geography.

"It's an ever-expanding network," McDonald said. "They've indicated this is their first real move into the Asian-infrastructure sector, so it's an indicator of where they're going. Asia obviously offers real growth. If they can start building a profile in that region, you would think they could extract a lot of fees over the years."

The Nation