Investment firm Babcock and Brown (BNB) chief executive has defended his company’s business model after returning a 58 per cent rise in profit to $643 million for 2007.
BNB chief executive Phil Green attributed the rise in profit to revenue generated from buying infrastructure assets and higher management fees.
When asked about its share price decline from a high of $34.78 set in July last year, to a recent low of $14.99, Green said investors did not understand the firm’s business model.
“They [investors] do not believe that we do not trade in financial assets,” he said.
“We are basically an industrial company.
“We develop wind farms, we invest in real estate, [and] we invest and manage aircraft.”
Green also said he was angry with market speculation that BNB executives could face margin calls on their shares like their counterparts from Allco Finance Group (AFG).
“It is total nonsense and absolute rubbish,” Green said.
The firm’s senior executives have not geared their BNB shares and that they only received them when the firm listed, he said.
“They have not leveraged them, they have never leveraged them and that is the end of the story,” Green said.
AFG’s share price fell 26 per cent on 23 January after its employee investment vehicle, Allco Principals Investments, sold stock to cover margin calls from its lenders.
BNB declared a dividend of 54.4 cents and is forecasting 15 per cent rise in profit to $750 million for 2008.
BNB shares rose $1.43 or 9.33 per cent to close at $16.76 yesterday.
