acquiring more wind energy - anyone following this, page-5

performance fees excessive ? 33 mil performance fee to BNB for recent sp rise - excessive ? Not if the sp continues to outperform! Here is quote:
"LAST week Babcock & Brown Wind Partners (BBW) reported cash flow for the six months to December of $15.8 million, but a net loss of $18.3 million after paying a performance fee to Babcock & Brown of $33 million.

After putting their eyes back in their sockets, some shareholders of BBW have since remarked upon this to me, in the context of recent columns about Macquarie Bank's fees. Those can sometimes make one feel a bit groggy, and to briefly lose consciousness when they are paid with debt, along with dividends, but a performance fee of double the cash flow? That's a good one.

Is the BBW fee the high watermark of Australia's infrastructure bubble? After all, long-bond yields are rising — if they keep going and a genuine global bear market in bonds develops, the police will soon arrive at the infrastructure party, the lights turned on and the folk in blue overalls brought in to clean up.

I turned to the fees section of the BBW Product Disclosure Statement and studied it for two days and two nights, blacking out frequently. The base fee is 1.4 per cent of market capitalisation plus debt plus any "firm commitments" to spend money minus cash.

Right … got that, although I do wonder about a fee calculated on debt plus intentions to spend money, and whether that might somehow encourage debt and intention rather than cash and action.

Anyway, at least it could be comprehended. The incentive fee, however, is virtually impossible for an earthling to understand, so I asked one of the friendly aliens at B&B to explain.

It's simple really — the fund pays 20 per cent of any outperformance against the S&P/ASX 200 Accumulation Index. The reason it takes two pages of Sanskrit to explain this is because BBW's performance is expressed as an index so that losses are carried forward into future years.

In other words if BBW's price falls, that has to be made up before any further fees can be paid.

No argument with that. So how come B&B made off with $2 for every $1 of cash earned by BBW in the latest half? Because after it was listed on October 27 in an initial public offering priced at $1.40 a share, BBW's price immediately jumped to $1.68 and closed on December 31 at $1.75 — a gain of 26 per cent versus 8 per cent for the S&P/ASX 200 Accumulation Index for the half-year