Danny John
February 7, 2007
MACQUARIE Bank is set to mount a near-$40 billion assault on assets around the world with plans to raise more equity and debt to support its expansion overseas.
Fresh from its participation in the still-to-be-consummated $11 billion private equity bid for Qantas, the bank flagged a new round of financing in its drive to snap up infrastructure operations and parcel them in unlisted funds.
Analysts yesterday anticipated that Macquarie, whose interests range across airports, toll roads, water companies, real estate and car parks to name but a few, could well raise between $12 and $14 billion in equity alone in the coming year. This would allow it to attract a further two to three times the same amount of debt.
However, the bank is becoming a victim of its own success with market expectations of a profit upgrade failing to appear on the back of a trading update. That saw Macquarie's shares fall $2.48 to $81.40 yesterday as traders dumped the stock.
While chief executive Allan Moss said the bank was on track for a strong second-half performance for the year ending March, analysts had been expecting indications of a figure higher than $600 million. That would produce a full year figure of well over $1.2 billion.
But with no extra clues to the final outcome, yesterday's sell-off was the first setback for the stock after a 10 per cent rise alone in the share price over the last four weeks, fuelled by market talk of the number of corporate deals under way.
Goldman Sachs JBWere said that having run up from $60 since September to a recent high of $88, the shares could now drop back to as low as $75 in coming weeks due to a "touch of disappointing news".
Macquarie is looking to bolster its second-half profits by selling a number of businesses before its March year-end, which would help to ease the $1.5 billion pressure on its own balance sheet and clear the way for a new buying spree.
The bank has suffered delays over the last year in offloading some of the companies because it was not clear at the time whether it should spin them off into unlisted funds or float them.
"Now we're focusing on unlisted and that clearly reflects the investment preference pretty much globally," Mr Moss said.
He said yesterday that there was "huge interest" in the businesses concerned and that talks were under way with several parties. He would not list which assets were on the block because of the negotiations.
"It might not work to our commercial advantage to comment at this stage," he said.
The bank has expanded both its focus on international deals and its overseas operations.
It has taken on an extra 15 per cent in staff since last March, employing a total of 9400 people, of whom 3200 are based overseas. International numbers have jumped by more than a quarter in 10 months.
Macquarie also revealed that it had disposed of around $1.3 billion of businesses since last September but at the same time bought a further $900 million. The next round of sales is likely to raise under $1 billion.
I fear that as all good fairytales, this one must also come to an abrupt end. All this buying by MacBank shows an aggressive approach to business, which leaves little room for a more "human" approach to companies. Qantas will be no different. If you end up paying too much for something, the first thing you will try to do is to recoup some of that money. It should be clear that both Qantas management and MacBank know exactly how to do that, and that will be through its employees and its operations. I believe that what the travelling public need to hear, and this will put pressure on the government, is how their air safety could be compromised if more maintenance and flight attendant jobs go overseas, or if cheaper labour is brought in. These are the issues our unions need to focus on, together with highlighting the obscene amounts of money a few individuals will be making at the expense of thousands of others.