UPDATE 1-Babcock & Brown in talks with potential partners

SYDNEY, Oct 23 (Reuters) – Babcock & Brown Ltd has been approached by a number of parties on a potential strategic relationship, the troubled Australian investment bank said on Thursday.

The bank said it had started a process to review the proposals, confirming a report in the Australian Financial Review business daily.

‘The process is at a preliminary stage and there is no certainty that any agreement will eventuate,’ Babcock said in a statement.

Babcock & Brown is looking to pay down A$400 million ($268 million) of debt, but said there was no time frame and that this would occur as the company gradually sold off assets.

The bank is being advised by Deutsche Bank and Goldman Sachs JBWere.

Babcock & Brown and its satellite funds have seen their shares nosedive this year as the group’s model of borrowing heavily to buy assets and then sell them into investment funds came under stress amid the global credit crunch.

Babcock & Brown’s shares last traded at A$1.40, down 94 percent so far this year, or three times the fall in the broader market.

The bank’s shares were up 3.6 percent to A$1.45 at 0217 GMT, off an earlier peak of A$1.57, bucking a 3.8 percent drop in Australia’s benchmark index.


(Reporting by Sonali Paul and Mette Fraende; Editing by James Thornhill)