What to do with Babcock and Brown?

B&B specialises in buying assets such as ports and utilities and bundles them into listed and unlisted funds, from which it earns management fees
Macquarie, specialises in infrastructure, real estate and aircraft leasing

As hedge funds woke up to the fact that the entire model is unsustainable and they exacerbated things by short-selling back in June, B&B has seen their market value tumble.
B&B is undergoing a strategic review that seeks to cut the level of its balance sheet leverage and non-strategic assets
Babcock & Brown’s satellite funds have announced writedowns or sold assets at knockdown prices to repay debts

Implications:
A) Reduction in demand for Infrastructure plays which have previously been hoarding headlines for the last few years as Macquarie, B&B, Private Equities and Soverign funds competed with each other to take these companies private on the notion of strong cash flows, etc (cheap funding)

B) Average premium of share price over Regulated Asset Base still at a high of 14-16% for UK water companies which I believe may reduce in the coming quarters

C) Utilities, Infrastructure being traditionally defensive in downturns may see some erosion in their built-in merger premium from the years of cheap and easy credit

D) Until liquidity returns to the market, Private Equity players will be careful about making large acquisition of Infrastructure assets. However, possibility of trade acquisitions by cash rich incumbents is likely to persist and the next test case will be the amount of interest in BAA's divesture of Stanstead and Gatwick airports