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Infrastructure Dealer suffering |
rffrydr
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 Posted: Sat May 12, 2007 12:54 pm Post subject: Infrastructure Dealer suffering |
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Has Macquarie Bank met its nemesis? The high-flying Australian bank had egg on its face yesterday as a brace of deals hung in the balance. The fate of its proposed Dollars 9bn buy-out of Qantas lies with the lawyers, following an inconclusive tender process. And, separately, it was forced to stump up more money to try to salvage a Dollars 6.5bn bid for energy group Alinta.
Rivals would love to see Macquarie, which pioneered the model of packaging and re-selling infrastructure assets while skimming off multiple fees, take a drubbing. But even if both deals flop, many more have not: in the past two months alone Macquarie has had equity participation in some Dollars 20bn worth of deals. Nor does it have any trouble attracting funds, as evidenced by the Dollars 10bn raised last week. Assuming annual management fees of 1.3-1.5 per cent, that alone could trump the expected initial fees from the Qantas deal.
Away from the deal flow, there are some quibbles. Listed funds of repackaged infrastructure assets performed well in the first quarter, but have largely underperformed over 12 months. Macquarie's investment bank owes an increasing portion of its business to captive deals - two-thirds of its total deals so far this year, according to Thomson Financial. And, although Macquarie has continued to confound critics, it is growing harder to clinch big-ticket deals - as Qantas may yet demonstrate.
Moreover, Macquarie clearly stumbled on Qantas. Sure, the pitch was queered by hedge funds, but the buy-out trio must take some of the blame for the fiasco - including the confusion on cross-checking partial acceptances. On Alinta, Macquarie was on thin ice initially by advising the energy group as it was poised (but not yet signed) to join a consortium seeking to buy it. Embarrassing, yes, but not enough, yet, to derail the success story that is Macquarie.
Source Citation: "Macquarie stumbles THE LEX COLUMN.(LEX COLUMN)(Column)." The Financial Times (May 8, 2007)
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rffrydr
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| Posted: Sat Nov 17, 2007 8:35 pm Post subject: |
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Macquarie defies the world (asia yes, accounting? yes maybe more than we think):
| Quote: | Cautious Macquarie
Published: November 13 2007 09:15 | Last updated: November 13 2007 19:03
It really is a different world Down Under. While US and European banks unveil ever bigger write-offs, Australia’s Macquarie Group is still on a roll. Bullet points from the interim results sound almost alien: “record half-year net profit” and “no problem trading exposures”.
Some of this is serendipity. Macquarie’s natural stomping ground, responsible for two-thirds of total income, is Asia and Australasia. Buoyancy in those markets enabled Macquarie to lift pre-tax income in investment banking by 44 per cent in the first half on a year-on-year basis. Less kindly markets would hamper Macquarie, in spite of its much- vaunted diversity, since its model of buying assets, bundling them up into funds and selling them on means multiple revenue streams contract when transactions dry up.
Macquarie already sports battle scars. Banking and securitisation profits fell 10 per cent over the period. Some of the group’s listed infrastructure funds continue to underperform, erasing performance fees. Softer global markets, allied with a desire to hold back firepower for future opportunities, have resulted in growth rates of risk-weighted assets shrinking to an annualised 16 per cent, down from a run rate of 41 per cent in the previous two years. Prime assets now sitting on its books could sour quickly. Macquarie Group is long on assets that are nearing bubble levels, including Asian real estate. It is also rapidly building vulnerable business lines: margin lending for activity on the frothy Australian stock market is up 31 per cent year on year.
Pricier debt and more expensive assets bode ill for returns and the multiple pipelines that fuel the Macquarie machine. Global infrastructure deal flow is healthy on an announced basis, Dealogic data show, but completed deal growth is decelerating. Not for nothing is Macquarie warning that second half numbers will be far more muted.
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