SCUTTLEBUTT about the possibility of a private equity-led bid for Telstra is swirling around again. The latest whispers centre on a hostile bid that some suggest could be structured like the Babcock & Brown takeover of the Irish telephone company Eircom for $8 billion last year.

Of course, there's a vast difference between the Australian investment bank's acquisition in Ireland and the potential for private equity to have a tilt at Telstra for between $68 billion and $74 billion.

Not least of which is the limit on foreign ownership in Telstra of 35 per cent, as well as the two-year escrow period on the 17 per cent of Telstra shares in the Future Fund.

"Apart from Macquarie Bank, which has bit of an appetite, it's difficult to identify any Australian entity with the capacity to fund [a bid for Telstra]," a BBY analyst, Mark McDonnell, said yesterday. Furthermore, the global credit crunch makes the possibility of private equity raising the debt needed to advance on Telstra all the more doubtful.

As another analyst put it yesterday: "It would be a monster transaction."

That's because a bid for Telstra would dwarf the largest leveraged buyout last year by Blackstone of Equity Office Trust in the US for $US39 billion ($42.3 billion).

Rumours of a private equity bid for Telstra last emerged in May, only to be promptly kyboshed by analysts and Telstra's chief executive, Sol Trujillo.

"If these rumours have got any merit it's not showing in the share price," McDonnell said.

Europe their oyster

Eircom popped up as an aside during B&B chief executive Phil Green's guest appearance at the Australia-Israel Chamber of Commerce lunch in Sydney yesterday. But it is wider European interests that are now in his sights rather than just an telecom company.

The B&B boss disclosed that the group's Euro-infrastructure fund is chasing €2 billion ($3.1 billion) worth of targets to add to the Spanish tollroads housed within the operation. It recently raised €1.6 billion for the fund and can comfortably leverage against that if it finds the right assets to buy.

B&B has seen no slowdown in the number of deals coming its way since the advent of the global liquidity crisis although it has had to talk to more banks than usual to raise the necessary amount of debt to fund those transactions. Now that it has Alinta under its belt and has just listed its aircraft leasing business in New York, the next round of deals can't be far away.

Cracking on to Cracow

Lion Selection looks to be hoarding cash before a potential $200 million-plus purchase of Newcrest Mining's 70 per cent stake in the Cracow goldmine.

Lion, which owns 30 per cent of the Queensland mine and holds pre-emptive rights over Newcrest's stake, yesterday sold its holding in Toronto-listed Platmin for $US101.6 million ($110 million).

Lion said it would bank $29 million from the sale, done through its African funds.

Newcrest has started a sales process for its interest in Cracow, too small for Australia's largest independent goldminer.

Newcrest's chief executive, Ian Smith, last week said more than 20 parties had signed confidentiality agreements and made clear his company would not accept less than $200 million.

Under its preemptive rights agreement, Lion will have to be willing to pay as much as the top bidder in Newcrest's auction.

How to annoy people

Beleaguered infrastructure services company Downer EDI has earned the wrath of the analyst community after its profit warning on Friday, just more than two months after making a rosy forecast of double-digit profit growth.

The downgrades from analysts came thick and fast as at least three brokerages - ABN Amro, UBS and Credit Suisse - took a bleak view of the latest stumble. Shares in Downer closed unchanged at $5.79 yesterday, after almost a 13 per cent slump on Friday.

Edited by Matt O'Sullivan

xchange@smh.com.au