Investor Presentation

1. Investor Presentation

2. Important Notice This presentation was prepared exclusively for the benefit and internal use, andis for the confidential use only, of those persons to whom it is presented or transmitted and is provided on the basis that each of those persons is a wholesale client (as defined in Section 761G of the Corporations Act). This presentation is not and does not form part of an offer, invitation or recommendation in respect of securities. The information contained in this presentation is given without any liability whatsoever to Babcock & Brown Power Limited, Babcock & Brown Power Services Limited, Babcock & Brown Limited or any of their respective related entities (collectively “Babcock & Brown”) or Deutsche Bank AG or Morgan Stanley Dean Witter Australia Securities Limited or any of their respective related entities (collectively “Joint Lead Managers”) or any of Babcock & Brown’s or the Joint Lead Managers’ respective directors, officers, employees or agents, and such persons disclaim any liability whatsoever (including for negligence) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. This presentation is not intended to constitute legal, tax or accounting advice or opinion. No representation or warranty, expressed or implied, is made as to the accuracy, completeness or thoroughness of the content of the information. The recipient should consult with its own legal, tax or accounting advisers as to the accuracy and application of the information contained herein and should conduct its own due diligence and other enquiries in relation to such information. The information in this presentation has not been independently verified by Babcock & Brown or the Joint Lead Managers.Babcock & Brown and the Joint Lead Managers disclaim any responsibility for any errors or omissions in such information, including the financial calculations, projections and forecasts set forth herein. No representation or warranty is made by or on behalf of Babcock & Brown or the Joint Lead Managers that any projection, forecast, calculation, forward-looking statement, assumption or estimate contained in this presentation should or will be achieved. Past performance is not necessarily a guide to future performance. Please note that, in providing this presentation, Babcock & Brown and the Joint Lead Managers have not considered the objectives, financial position or needs of the recipient. The recipient should obtain and rely on its own professional advice from its tax, legal, accounting and other professional advisers in respect of the recipient’s objectives, financial position or needs. This presentation must not be disclosed to any other party and does not carry any right of publication. This presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by Babcock & Brown. Neither this presentation nor any of its contents may be reproduced or used for any other purpose without the prior written consent of Babcock & Brown.

3. Agenda Overview Warren Murphy • Director of Babcock & Brown Power • Head of Australian Energy, Babcock & Brown The Business & Key DriversPaul Simshauser • CEO of Babcock & Brown Power Key Financials James Brown • CFO of Babcock & Brown Power Offer Summary Joint Lead Managers

4. Introduction Babcock & Brown Power (BBP) is • A power generation business comprising eight1 power stations across five states • A substantial business with a market capitalisation of around $900 million2 • A growth business with attractive yield • Managed by Babcock & Brown, an experienced operating and management team 1. 7 Operating power stations and 1 power station under construction 2. Assumes 359 million Securities list at the Offer price of $2.50 per security

5. Investment Highlights • •Well managed and diversified business delivering predictable cash flows • A unique opportunity to invest in the only pure play power generation business listed on the ASX • • Positioned in a growing market with favourable supply dynamics • Further growth through expansions, new development opportunities and acquisitions • • FY07 distributionyield of 9.1% growing by 5% in the first year with a 4% growth target beyond that • • Managed by Babcock & Brown, an experienced power station developer and manager with a dedicated, experienced operating management team Unique – Strong Growth – Attractive Yield

6. BBP offers a unique combination of attractive investment features Strong & growing cash flows underpinned by diversification & management

7. A pure power play enables investors to access the attractive investment fundamentals of this industry Non-Government Owned NEM Generation Portfolios MW 4,000 Pure Power Generation 7 Operational Power Stations 3,500 3,000 2,500 2,000 1,500 1,000 500 - INP TRU BBP AGL ORG Source: Scheduled Generator List 21/9/2006, NEMMCO, Aggregated capacity used based on effective interests >= 50%, wind excluded The only pure play power generation business listed on the ASX

8. Significant capacity shortfall creates attractive market conditions for power generation businesses ~800MW pa Source: NEMMCO Statement of Opportunities update July 2006 10% POE on required reserve margins BBP is extremely well positioned to capitalise on tight supply conditions

9. BBP has a range of outstanding growth opportunities + + 1. Accounts prepared on a consolidated basis. EBITDA includes income from equity accounted investments Well positioned to deliver security holder growth

10. Strong growth with attractive fully tax deferred yield1 Forecast Distribution Yield % 12 4% medium term distribution growth target 11 5% 9.6% 10 9.1% 9 8 7 6 5 2008+ 2007 2008 1. Tax deferral may constitute the distribution of franking credits and the distribution of trust capital 9.1% FY07 distribution yield with 5% growth in the forecast period

11. Unique Investment Opportunity Paul Simshauser • Well managed and diversified business • Attractive market dynamics • Development pipeline of growth opportunities

12. The Australian Power Industry NEMMCO / IMOWA Market operators Competitive Competitive Generation Transmission Distribution Retail Electricity transportation using high voltage transmission lines to major demand regions Electricity purchased from the market and sold to end users of electricity Electricity distribution from transmission lines to end users of electricity Electricity production from power stations fuelled by coal, gas, hydro, wind, etc Regulated NGO NEM Generation Portfolios MW 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - INP TRU BBP AGL ORG BBP is a business of scale in the Australian power industry

13. Oakey Braemar Redbank Kwinana Flinders Ecogen BBP is a ~3,000MW Power Generation Business 1. Effective interests 2. Kwinana is currently under construction PPA = Power Purchase Agreement Refer to the PDS for more information on the BBP assets Diversified by fuel, operating mode and region

14. Strategic Portfolio of Assets Positioned for Growth 1. CCGT = Combined Cycle Gas Turbine Strategic assets are positioned to deliver growth to unit holders

15. Investment Strategy • Provide investors with long term capital growth complemented by an attractive cash yield • Develop a diversified portfolio of power generation assets, both in Australia and internationally by - expanding the generation capacity of existing assets - developing new power assets - acquiring new power assets • Target investments with risk/return characteristics similar to those of the initial portfolio • Development and acquisition opportunities to be introduced by Babcock & Brown • Initial international focus is likely to be on acquisition opportunities in OECD regions with development opportunities to be assessed in due course BBP has a clearly defined growth strategy

16. Well Managed and Diversified Business

17. Board and Management Board Senior Management Chairman Chief Executive Officer Peter Hofbauer - Global Head of Infrastructure, Babcock & Brown Warren Murphy - Head of Australian Energy, Babcock & Brown Len Gill - Director of Verve Energy - Previously CEO of TXU Australia John Fletcher - Director of Integral Energy Australia - Previously CFO of AGL Peter Kinsey - Director of ABB Australia Pty Ltd - Legal & Compliance Manager South Asia for ABB Ltd Paul Simshauser - Previously CEO NewGen Power, GM Trading Stanwell James Brown - Previously CFO Foodland Associated, CFO GE Commercial Brian Green - Previously GM Operations, NRG Flinders Executive Chief Financial Officer Independent Chief Operating Officer Independent Independent • Experienced power station management • Over 500 employees across the business A strong team of experienced operational and development executives

18. Diversified by Fuel, Region and Operating Mode Operating Mode (MW) Fuel Split (MW) Region (MW) WA 11% Intermediate 23% SA 26% Coal 31% Base 34% QLD 25% Gas 69% NSW 5% VIC 33% Peak 43% Calculations are based on gross station capacity Peak, Intermediate and Base Load split based on capacity factors of <20%, <50% & 50%+ respectively All numbers include Kwinana, which is currently under construction Diversified business delivers predictable shareholder returns

19. Predictable Revenues derived from Long Term Contracts and Rolling Hedges Peaking PPA with 13 year tenor Peaking PPA with 8 year tenor Oakey BBP Generation Revenue FY07 Cap contract with 10 year tenor Braemar Contracted, 39% Unhedged Pool, 20% Ecogen Base load PPA with 24 year tenor Redbank Rolling hedges, 41% Base load PPA with 25 year tenor Kwinana Rolling hedges provide managed exposure to attractive market conditions Flinders • Long term off-take agreements are written with high credit quality counterparties • Revenue indexation provides an underlying growth platform for BBP distributions • Predictable operating costs reinforce revenue certainty to deliver predictable cash flows Contract mix provides predictable revenues and attractive market exposure

20. Carbon Emissions are Lower than the National Average Source: Cabon intensity estimates from ACIL Tasman & IES 2005 Energy production used for calculation. First year energy projection used for Kwinana Aggregate BBP generation and major contracts are included in the calculation • BBP also receives revenue from the creation of NGACs and GECs • Future project developments are well positioned to benefit from existing gas powered generation incentive schemes BBP’s exposure to carbon related penalties is minimal

21. Attractive Market Dynamics

22. High Demand for Peak Supply across the NEM • NSW & SA reserve requirements are already in deficit • Tight supply conditions are conducive to high pool and forward contract prices • Peak demand determines generation capacity requirements • Peak demand growth in all regions is forecast to exceed energy growth • Queensland is the fastest growing region in the NEM ~800MW pa growth Equivalent of ~2 Braemar power stations pa Source: 10% POE data. NEMMCO Statement of Opportunities July 2006 update, IMOWA, aggregate of each region Source: NEMMCO Statement of Opportunities 2005 BBP is well positioned to capitalise on favourable supply / demand dynamics

23. Flinders – Strategic Position in Tight SA Market A unique and flexible asset that earns premium revenues

24. Peak Demand Case Study – A Queensland Day • Extreme weather patterns cause spikes in electricity demand • Demand spikes drive price volatility • Peak generators provide hedge products to retailers for managing price volatility • Peaking capacity is required to operate infrequently (less than 10%) Demand (MW) 9,000 Extreme Weather Day 8,500 Average Day 8,000 Peaking capacity required 7,500 7,000 6,500 Hot weather drives air conditioning load through the heat of the day and into the evening 6,000 5,500 The extreme demand day maximum was a ~15% increase on the average demand day maximum 5,000 4,500 4,000 00:30 01:30 02:30 03:30 04:30 05:30 06:30 08:30 09:30 10:30 11:30 12:30 14:30 16:30 17:30 18:30 20:30 22:30 23:30 07:30 13:30 15:30 19:30 21:30 Source: QLD demand data for Summer 05/06 Peak demand events require low cost, fast start power stations

25. Braemar – Leveraged to Peak Demand Growth • Key gas and electricity infrastructure was designed to allow for future expansion • Site location provides access to multiple competing gas producers at minimal transmission cost • Gas lateral from Kogan North and the Roma to Brisbane Pipeline provides line pack to allow for flexible operation • Ability to convert to Combined Cycle Gas Turbine and expand capacity at low cost Key Information 450MW OCGT Site consented for 900MW Commissioned September 2006 Completed on schedule and on budget Long term cap contract with Energex Ltd Strategically positioned to capitalise on peak growth opportunities

26. Development Pipeline of Growth Opportunities

27. BBP has been Developed over 10 Years Developed via green field developments and selected strategic acquisitions

28. A Typical Power Station Development Development undertaken by B&B with committed projects approved by BBP

29. Future Development Opportunities have been Identified Babcock & Brown has a substantial pipeline of development projects

31. Financial Highlights- James Brown • Key financials • Distributions • Capital management • Security structure • Sources and uses of funds • Pre IPO funding

32. FY08 EBITDA breakdown by segment1 Intermediate 30% Base Load 47% Peak 23% Key Financials Revenue Position 100% 80% 60% 40% 20% 0% FY 07 FY 08 Contracted Rolling Hedge Pool Other 1. EBITDA segmentation ignores Osborne contribution Refer to Section 9 of the PDS for more detailed financial information

33. Forecast Distributions Forecast 9.6% - $87m 2008 Forecast 9.1% - $45m1 2007 0.0 5.0 10.0 Distributions Distribution Policy • Pay all free operating cash flow after: • debt servicing • working capital • maintenance capital expenditure • other amounts prudent to reserve for 1. 9.1% represents an annualised yield 2. Applicable from interim 2008 Refer to section 9 of the PDS for more information Strong operating cash flows

34. Capital Management • BBP will maintain an optimal level of debt at both the asset and corporate levels • Current conservative gearing level of ~50% • Investment grade rating targeted • Interest rate hedging policy in place – currently 90% hedged • Current project finance debt structures provide opportunities for further refinement Latent balance sheet capacity to fund future growth opportunities

35. Stapled Security Structure • Management Fee • 1.0% of Net Investment Value • Calculated quarterly • Incentive Fee • 20% of out-performance against the S&P/ASX 200 accumulation index • First calculation and payment are deferred until December 2007 Note: Part of loan from BBP to Braemar is an arms length subordinated loan that was purchased by BBP, rather than a shareholder loan Provides optimal tax effective distributions to unit holders

36. Sources and Uses of Funds Uses Sources Total 446 Total 446 BBP will have a market capitalisation of around $900 million4 1. Costs and Fees is the aggregate sum of costs and fees associated with the IPO, acquiring Flinders and the minority interests in Redbank, Ecogen and Oakey 2. BBPCS interest + Flinders 3. Proceeds to existing BBPCS holders, Babcock & Brown and Asset Vendors 4. Assumes BBP securities list at the issue price of $2.50 per security

37. Pre IPO Funding • BBPL issued $410 million of convertible securities (“BBPCS”) in 2005 and 2006 • Funds used to acquire assets in the Initial Portfolio • Holders comprise Foundation Investors, Babcock & Brown employees and Institutional Investors Pre IPO Funding • BBPCS converted into $410 million of Stapled Securities prior to the Offer • Holders agreed to: • sell $132 million of Stapled Securities into the Offer • reinvest and acquire additional Stapled Securities totalling $103 million as part of the Foundation Offer1 • voluntary escrow for six months from Allotment Date in respect of $185 million worth of Stapled Securities Conversion, Reinvestment & Acquisition IPO • 100% of BBPCS Holders2 immediately prior to the Offer have elected to remain as Securityholders in BBP • BBPCS Holders will retain an investment of ~$400 million in BBP following the Offer 1. BBPCS Holders acquiring additional Stapled Securities are entitled to a sub-underwriting fee 2. each Holder has retained a significant percentage of their investment in BBP following conversion to Stapled Securities

38. Offer Structure- Joint Lead Managers • Offer structure • Indicative post IPO register • Key dates

39. Offer Structure • Offer size of $446 million • Foundation Offer of $229 million • Institutional and Broker Firm Offer of $217 million • Fixed Price Offer of $2.50 per security • 359 million securities on issue at listing • Market capitalisation of $898 million1 Offer structure Forecast distributions • FY07: 9.1%2 yield (12.6 cps) • FY08: 9.6% yield, (24.0 cps3) • 5% distribution growth FY08 • 4% medium term target distribution growth • Provides fully tax deferred distributions in the forecast period4 JLMs & Bookrunners • Morgan Stanley and Deutsche Bank Co Lead Managers • UBS, ABN Amro, Citigroup, Tricom 1. Assumes 359 million Stapled Securities on issue and securities list at the Offer Price of $2.50 per Stapled Security 2. 9.1% represents an annualised yield 3. Assumes DRP participation is activated from December 07 distribution 4. Tax deferral may constitute the distribution of franking credits and the distribution of trust capital

40. Babcock & Brown 10% Vendor New Securityholders Securityholders 9% 37% BBPCS Holders 44% Indicative Post IPO Register Approximately 35% of Securities on issue following completion of the Offer will be subject to voluntary escrow arrangements 1. Vendor securityholders comprise vendors who have sold assets into the fund, part consideration for which are BBP securities

41. Key dates1 1. Babcock & Brown reserves the right to change the Offer time table 2. Timing for Retail firm commitments and Institutional firm bids may be brought forward

42. Unique – Strong Growth – Attractive Yield • •Well managed and diversifiedbusiness • A unique opportunity to invest in pure play power generation • • Attractive market dynamics • • Pipeline of attractive development opportunities • • FY07 distributionyield of 9.1% growing by 5% in the first year • • Managed by Babcock & Brown