RBS in rival bid for Babcock Infrastructure-paper

SYDNEY, Nov 12 (Reuters) - Royal Bank of Scotland (RBS.L) will make a A$1.5 billion bid ($1.40 billion) for Australian investment firm Babcock & Brown Infrastructure (BBI) (BBI.AX), taking aim at a rival Canadian proposal, the Australian Financial Review said on Thursday.

Citing an unidentified RBS source, the business daily said RBS will give details of the bid if BBI investors reject a $1.6 billion recapitalisation plan backed by Canada's Brookfield group (BAMa.TO) (BIP.N).

RBS has twice proposed injecting capital into BBI, which needs to cut its around A$9 billion in debt, with about A$3 billion of that maturing in stages by July 2011. BBI has said it risked insolvency without the recapitalisation.

BBI's assets include Australia's biggest coal terminal, Dalrymple Bay, as well as ports, gas pipelines and railways in Australia and Britain's PD Ports. (Reporting by Jonathan Standing; editing by Denny Thomas)