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Macquarie Group

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Macquarie Group Limited
Company typePublic
ASX: MQG
IndustryFinancial Services
Founded1969; 55 years ago (1969)
Headquarters50 Martin Place
Sydney, New South Wales
Australia (State Savings Bank Building)
Area served
Worldwide
Key people
Peter Warne (Chairman)
Nicholas Moore (CEO)
ProductsAsset management, Investment banking, Corporate banking, Private equity, Equities trading, Commodity trading, Futures and options trading, Foreign exchange trading, Money market trading, Consumer Banking, Wealth management, Investment Management, Leasing
Increase A$10.9 billion (2018)
Increase A$2.6 billion (2018)
AUMIncrease A$496.7 billion (2018)
Number of employees
Increase 14,469 (2018)
Capital ratio13.5% (2018)
Websitewww.macquarie.com

Macquarie Group Limited (/məˈkwɔːri/) is a global diversified financial group. Headquartered and listed in Australia (ASX:MQG), Macquarie employs more than 14,000 staff in 25 countries,[1] is the world's largest infrastructure asset manager[2] and Australia's top ranked mergers and acquisitions adviser,[3] with more than $A495 billion in assets under management.[1] The company's operating groups include Macquarie Asset Management and Macquarie Capital.

Macquarie holds a number of licences enabling it to conduct activities in the jurisdictions in which it operates and is regulated by a significant number of regulators globally. In Australia, Macquarie Bank Limited holds a banking licence and as an Authorised Deposit-taking Institution (ADI), is supervised by the Australian Prudential Regulation Authority (APRA). Other key Australian regulators include the Australian Securities & Investments Commission (ASIC) and AUSTRAC. Globally, key regulators include the UK FCA and PRA, US CFTC, FINRA, NFA, FERC, SEC and Federal Reserve Board, IIROC, MAS, Hong Kong SFC, HKMA, SEBI, Japan FSA, Korean FSS and New Zealand FMA.

The company's high margins, profits and the lucrative rewards for its executives and shareholders resulted in the Australian media labeling the group “The Millionaire Factory"[4] although Macquarie's compensation ratio fell to 38.7% in 2018 from 48.3% in 2007 as the group has shifted increasingly from capital markets facing to annuity-style business activity. As of 4 May 2018, the group’s chief executive Nicholas Moore is the nation’s highest paid CEO of a listed company as Macquarie announced a net profit after tax for the year at $A2.6 billion and a record final dividend per ordinary share of $A5.25.[5] At this time Macquarie had maintained its rank of 1st for Total Shareholder Return among ASX 20 companies over five years and 2nd on the MSCI World Capital Markets Index of comparable firms over five years.

Macquarie’s philanthropic arm, the Macquarie Group Foundation, has contributed more than $A330 million globally since 1985 with its community investment strategy “to support social innovation, and to strengthen the impact of non-profit organisations by funding capacity building and collaboration.”[6]

The firm’s collection of artworks, the Macquarie Group Collection, established in 1987 to support emerging artists and displayed in more than 30 Macquarie offices worldwide, is one of world’s largest corporate collections of Australian art comprising more than 750 individual works.

History

1969–1979

Macquarie was founded on 10 December 1969 as Hill Samuel Australia Limited, a subsidiary of the UK's Hill Samuel & Co. Limited.[7]

Australian businessman Stan Owens compiled a proposal for Hill Samuel & Co. to establish an Australian subsidiary. After presenting his report in London, Mr Owens was offered the role of implementing it. He became Executive Chairman of Hill Samuel Australia (HSA) and founded the company from offices at Gold Fields House in Sydney's Circular Quay. The company's first three employees were Stan Owens, Blair Hesketh and Geoff Hobson. Later Chris Castleman (on loan from the British parent) and Bill Clarke joined. David Clarke and Mark Johnson were introduced to HSA and became joint Managing Directors in 1971. Despite being given a four-year allowance by the British parent to turn a profit, HSA was profitable by the end of its first twelve months of trading.

In 1971 HSA secured Australia’s biggest mandate at the time, a $US60 million financing for corrugated iron manufacturer John Lysaght Australia. HSA expanded its presence in the Australian market, opening a Melbourne office in 1972, and a Brisbane office in 1975.

In other business initiatives during the decade, HSA helped pioneer the foreign currency hedge market in Australia, commenced gold bullion trading, extended its coverage to all listed commodities and was one of the first merchant banks to be granted floor member status at the Sydney Futures Exchange.

1980–1989

The 1980s were marked by significant financial market deregulation in Australia, including the floating of the Australian dollar and the removal of restrictions on foreign banks. To take advantage of the opportunities offered by deregulation, HSA submitted a proposal for the formation of a new substantially Australian owned and controlled bank to be called Macquarie Bank Limited.[8] Authority for HSA to become Macquarie Bank Limited (MBL) was received from the Federal Treasurer Paul Keating on 28 February 1985, making it only the second private trading bank to be established in Australia in modern times.[9]

The bank continued to grow its activities in the 1980s. It became Australia's leading bullion trader, initiated 24-hour foreign exchange trading, commenced stockbroking and corporate leasing activities, opened offices in London and Munich, expanded into funds management by establishing Australia’s first cash management account and formed a new structured finance business which would grow to become one of the largest in the world.[8] It also implemented the risk management framework which is credited for the organisation's long history of unbroken profitability. The framework ensured Macquarie was not materially exposed to the October 1987 global share market crash.[citation needed]

In other initiatives, Macquarie established its philanthropic arm, the Macquarie Group Foundation, which has since contributed more than $A330 million to community organisations around the world, and established what has become one of Australia’s largest corporate art collections, the Macquarie Group Collection.[10]

1990–1999

On 29 July 1996, Macquarie Bank Limited listed on the Australian Securities Exchange (ASX:MQG).[11] By 30 October 1996 Macquarie had entered the ASX All Ordinaries Index, with a market capitalisation of approximately $A1.3 billion and would grow to more than $A35 billion in 2018[1] to become one of Australia's largest listed companies.

Macquarie continued its overseas expansion during the early 1990s, opening offices in New York, Hong Kong, Singapore and Beijing, while extending its Australian operations to Perth and the Gold Coast. Acquisitions during the decade included Boston Australia Limited, Security Pacific Australia and the investment banking arm of Bankers Trust Australia.[12]

In 1994, Macquarie began its infrastructure investment business with the underwriting and placement of publicly listed equity for the Hills Motorway in Sydney.[8] It has continued to grow these activities to become the world's leading infrastructure manager.[13] During the decade, Macquarie also launched its private banking and residential mortgages businesses and established a number of real estate and investment trusts.

2000–2009

50 Martin Place, Macquarie Group's global headquarters in Sydney, Australia.

Macquarie continued to expand its Asia operations in the early 2000s with the opening of offices in Seoul and Tokyo in 2000, and through the acquisition of ING Group’s Asian cash equities business in March 2004.[14]

The decade was also marked by the global expansion of Macquarie's infrastructure business, with infrastructure investment funds established in Korea, China, Europe, Russia, India and the Middle East. On 16 December 2004, Macquarie Infrastructure Corporation began trading as Macquarie Infrastructure Company Trust on the New York Stock Exchange (NYSE:MIC).[15]

Macquarie made a number of significant acquisitions, particularly in the US, in the later part of the 2000s. These included US energy marketing and trading company Cook Inlet Energy Supply, establishing Macquarie's physical natural gas trading business in the US, and Constellation Energy’s Houston-based downstream natural gas trading operations. As at 2018 Macquarie Group is the second largest physical gas trader in North America.[16]

Other acquisitions included UK gas supply company Corona Energy in August 2006 and, in 2009, independent energy advisory firm Tristone Global Capital Inc; specialist investment bank Fox-Pitt Kelton Cochran Caronia Walker; Canadian wealth management business Blackmont Capital Inc; the wholesale electricity trading business of US firm Integrys Energy; US-based fixed income fund manager Allegiance Investment Management; the equity derivatives and structured products business of German private bank Sal. Oppenheim; and Condor Ferries service between the UK, Channel Islands and France.[17][18]

In 2005, Macquarie announced an unsolicited takeover bid for the London Stock Exchange valuing the company at £1.5 billion, a bid rejected by LSE management.[19]

In 2007, MBL securityholders and the Federal Court approved the restructure of the Macquarie Group into a non-operating holding company (NOHC) structure.[20]

2010–present

No. 1 Martin Place, Macquarie Group's secondary office in Sydney

In 2010, Macquarie Group completed its then largest acquisition with the purchase of Delaware Investments, a leading US-based diversified asset management firm, from Lincoln Financial Group.[21] As a result of the acquisition, Macquarie became one of the world's top 50 asset managers.[22] Delaware Investments was re-branded as Macquarie Investment Management in 2017.[23]

Macquarie has significantly grown its renewable energy activities this decade. In January 2015, Macquarie Group acquired a stake in Baltic 2 offshore wind park from EnBW for a fee totaling €720 million.[24] Macquarie Group led a consortium of bidders to successfully acquire the British Green Investment Bank for £2.3 billion.[25] The takeover means the group will manage or supervise around £4 billion of green infrastructure assets and projects, with a further £3 billion of investment targeted.[26] The accompanying announcement stated that it will still pursue its main purpose of attracting private funds to invest in renewable energy generation assets.

Macquarie's Corporate and Asset Finance business made a number of significant acquisitions. In March 2015, Macquarie announced the acquisition of a $US4 billion aircraft operating lease portfolio from AWAS Aviation Capital Limited.[27] In October Macquarie entered into an agreement to acquire the $A8.2 billion Esanda dealer finance portfolio from ANZ Banking Group.[28]

In June 2017 Macquarie’s Commodities and Global Markets business completed its acquisition of Cargill Inc’s [CARG.UL] petroleum business as well as its North America power and gas business. The transaction expanded Macquarie’s global financial and physical oil business footprint to include Geneva and Minneapolis.

Current operations

Macquarie employs more than 14,000 staff in 25 countries.[1] Macquarie’s business activities are organised into five principal operating groups.[1]

There are three annuity-style businesses:

  • Macquarie Asset Management – The world’s biggest infrastructure asset manager and a top 50 global asset manager, managing more than $A495 billion of assets on behalf of superannuation funds and other institutional investors
Macquarie Asset Management oversees three stand-alone businesses:[29]
  • Macquarie Infrastructure and Real Assets (MIRA) – Infrastructure, real estate, agriculture and energy
  • Macquarie Investment Management (MIM), formerly Delaware Investments – Equities and fixed income portfolios
  • Macquarie Specialised Investment Solutions (MSIS) – Structured products
  • Corporate and Asset Finance – Lends to customers and leases assets to businesses including a fleet of more than 600,000 cars, passenger aircraft, medical equipment, electronics equipment, rail stock and mining equipment
  • Banking and Financial Services – Comprises Macquarie’s retail banking operations and provides personal banking, wealth management and business banking products and services to more than 1 million clients.
101 Collins Street; Macquarie Group's Melbourne office.

There are two capital markets facing businesses:

  • Commodities and Global Markets – Conducts research on more than 2,300 stocks and market trading on behalf of clients across more than 160 products including equities, derivatives, fixed income, foreign exchange and commodities
  • Macquarie Capital – Advises companies on growth opportunities, sources investment funds, negotiates transactions and lists companies on the share market, as well as investing alongside clients.

In addition to the principal operating groups, Macquarie has a network of support groups including: Corporate Operations Group, Financial Management Group, Legal and Governance Group and Risk Management Group.

Macquarie’s Managing Director and Chief Executive Officer is Nicholas Moore, who replaced Allan Moss in May 2008.[30]

In the financial year ending 31 March 2018, Macquarie reported a record net profit $A2.6 billion and a record final dividend per ordinary share of $A5.25 per share.[31]

Board of directors

Macquarie Group's current Board of Directors includes:

Major General Lachlan Macquarie.

Macquarie Group takes its name from Major General Lachlan Macquarie, one of Australia’s early leaders who established the nation's first bank, introduced its first currency and initiated many significant economic and social reforms.

Macquarie Group's logo is a stylised representation of the Holey Dollar, Australia's first official currency.[46]

In 1813, Governor Lachlan Macquarie overcame an acute currency shortage in the colony of New South Wales by importing 40,000 Spanish silver dollars and punching a hole through the centre of them to create two unique coins, the Holey Dollar and the Dump.[46] The new currency stimulated the economy while retaining its intrinsic value, with the two new coins worth 25 per cent more than the original.

According to Macquarie Group, the Holey Dollar was Australia’s earliest example of financial innovation and embodies its pursuit of practical approaches with profitable outcomes.[47]

Reverse of an 1813 Holey Dollar, in the collection of the State Library of NSW.

Notable former employees

Business

  • Christopher Castleman - General Manager Hill Samuel Australia (1970-1971)
  • David Clarke - Joint Managing Director Hill Samuel Australia (1971-1977), Managing Director Hill Samuel Australia (1977-1984), founding Chairman of Macquarie Bank Limited (1984-2011)
  • Mark Johnson - Joint Managing Director Hill Samuel Australia (1971-1977), Director and/or Deputy Chairman Macquarie Bank Limited (1987-2007)
  • Tony Berg - Managing Director and Chief Executive Officer (1984-1993)
  • Allan Moss - Managing Director and Chief Executive Officer (1993-2008)
  • Richard Sheppard - Deputy Managing Director (1996-2011)

Public service

Macquarie Bank maintains political connections through the appointment of former politicians and senior political staffers to senior positions.

Criticism

In 2010, Macquarie Group through its subsidiary Macquarie Equipment Rentals was criticised by the Australian Competition and Consumer Commission for suing 300 small businesses caught up in misleading telephony bundling deals.[48]

In 2017, Macquarie, via a deal in which it acquired Thames Water, a private utility company responsible for public water supply and waste water treatment in the London region of the UK, was found to have transferred to Thames Water £2bn of debt before selling its stake in the company. These disclosures followed scrutiny of the possible financial causes of Thames Water's extensive pollution of the Thames, and other rivers, with untreated sewage between 2012 and 2014, for which Thames Water was fined a record £20m.[49][50] In response to criticism, Macquarie noted that during its tenure Thames Water invested more than £11 billion, or around £1 billion per year, more than twice that invested during the five-year period before privatisation in 1989.[51] The Lee Tunnel was commissioned in January 2010 and opened by Mayor of London Boris Johnson, in January 2016. The capital investment undertaken to London’s water supply was the first major investment since the Victorian era.

See also

References

  1. ^ a b c d e "Macquarie Group Limited, 2018 Annual Report" (PDF). 31 March 2018.
  2. ^ "Top 50 infrastructure investment managers 2018". IPE RA. Retrieved 2 July 2018.
  3. ^ Chandni, Trehan (1 September 2016). "50 MOST POWERFUL M&A FIRMS IN THE WORLD". Upside.
  4. ^ Desloires, Vanessa (22 September 2014). "Return of the 'millionaire's factory': Macquarie Bank splashing the cash again". Sydney Morning Herald. Archived from the original on 24 September 2014. Retrieved 24 August 2017. {{cite news}}: Unknown parameter |dead-url= ignored (|url-status= suggested) (help)
  5. ^ Letts, Stephen (4 May 2018). "Macquarie boss Nicholas Moore cemented as highest paid executive after $2.6b full-year profit". Australian Broadcasting Corporation. Retrieved 2 July 2018.
  6. ^ "Macquarie Group Foundation | Corporate Philanthropy | Macquarie Group". www.macquarie.com. Retrieved 2 July 2018.
  7. ^ developer@themonthly.com.au (4 July 2007). "Who's afraid of Macquarie Bank?". The Monthly. Retrieved 9 February 2017.
  8. ^ a b c developer@themonthly.com.au (4 July 2007). "Who's afraid of Macquarie Bank?". The Monthly. Retrieved 11 February 2017.
  9. ^ Australia, scheme=AGLSTERMS.AglsAgent; corporateName=Reserve Bank of. "Historical Series Breaks". Reserve Bank of Australia. Retrieved 9 February 2017.{{cite web}}: CS1 maint: multiple names: authors list (link)
  10. ^ "Partner's message :: Australian :: Art Gallery NSW". www.artgallery.nsw.gov.au. Retrieved 9 February 2017.
  11. ^ "Macquarie – how the mighty have changed - Share Trading | Switzer". www.switzer.com.au. Retrieved 11 February 2017.
  12. ^ Newswires, Dow Jones (28 June 1999). "Macquarie Bank to Acquire Unit of Bankers Trust Australia". Wall Street Journal. ISSN 0099-9660. Retrieved 9 February 2017.
  13. ^ "Global Alternatives Survey 2017". Willis Towers Watson. Retrieved 18 August 2017.
  14. ^ "East & Partners | Macquarie snaps up ING's Asian equity business". east.com.au. Retrieved 9 February 2017.
  15. ^ "Macquarie Infrastructure Company Reports 2004 Results (NYSE:MIC)". investor.shareholder.com. Retrieved 9 February 2017.
  16. ^ "Macquarie's World Part 2: American dream built on energy and infrastructure". Financial Review. 26 February 2018. Retrieved 2 July 2018.
  17. ^ "The Corona Energy journey :: Corona Energy". Corona Energy. Retrieved 9 February 2017.
  18. ^ "Macquarie to Buy the Boutique Firm Fox-Pitt Kelton". Retrieved 9 February 2017.
  19. ^ Muspratt, By Caroline. "LSE rejects 'derisory' Macquarie bid". Telegraph.co.uk. Retrieved 9 February 2017.
  20. ^ "MACQUARIE BANK LIMITED RECEIVES FINAL AUSTRALIAN FEDERAL COURT APPROVAL FOR RESTRUCTURE OF MACQUARIE GROUP" (PDF). Australian Securities Exchange. 2016.
  21. ^ McFarland, Lyndal (20 August 2009). "Macquarie to Acquire Delaware Investments". Wall Street Journal. ISSN 0099-9660. Retrieved 9 February 2017.
  22. ^ "Macquarie tops list of Australia's largest fund managers, enters world's top 50". Financial Review. 2 November 2015. Retrieved 2 July 2018.
  23. ^ "Macquarie Group's Delaware Investments Rebrands as Macquarie Investment Management". Macquarie. 3 April 2017. Retrieved 15 June 2017.
  24. ^ EnBW sells offshore windpark stake to Macquarie for 720 million euros. Reuters, 8 January 2015
  25. ^ "Macquarie Group leads consortium to acquire the Green Investment Bank". www.macquarie.com. Retrieved 23 February 2017.
  26. ^ "Australia's Macquarie Group acquires UK's Green Investment Bank". www.smh.com.au. Retrieved 23 April 2017.
  27. ^ "Macquarie to Buy Aircraft for $4 Billion, Raise Capital". Bloomberg.com. 3 March 2015. Retrieved 9 February 2017.
  28. ^ "Sale of Esanda Dealer Portfolio to Macquarie | Esanda". www.esanda.com. Retrieved 9 February 2017.
  29. ^ https://static.macquarie.com/dafiles/Internet/mgl/com/mirafunds/about-mira/docs/mira-credentials.pdf?v=39
  30. ^ a b c d e f g h i j k "Board of Directors | Macquarie Group". www.macquarie.com. Archived from the original on 15 December 2016. Retrieved 16 January 2017. {{cite web}}: Unknown parameter |dead-url= ignored (|url-status= suggested) (help)
  31. ^ "Macquarie Group 2017 profits beat expectations". Financial Review. 5 May 2017. Retrieved 22 August 2017.
  32. ^ "ASX Group Board". www.asx.com.au. Retrieved 16 January 2017.
  33. ^ Moullakis, Joyce (24 September 2015). "Macquarie Group appoints Peter Warne chairman". The Sydney Morning Herald. Retrieved 16 January 2017.
  34. ^ "Gary Banks | ANZSOG". www.anzsog.edu.au. Retrieved 16 January 2017.
  35. ^ "Board of Directors - Woolworths Group". Retrieved 16 January 2017.
  36. ^ Energy, Origin (1 December 2016). "Our Board - Origin Energy". www.originenergy.com.au. Retrieved 16 January 2017.
  37. ^ "New chairman Cairns promises strong corporate governance for David Jones". ABC News. 12 March 2014. Retrieved 16 January 2017.
  38. ^ "Cairns commences as Woolworths chair - Australian Institute of Company Directors". www.companydirectors.com.au. Retrieved 16 January 2017.
  39. ^ Foundation, Planet Ark Environmental. "Meet the Board". Planet Ark. Retrieved 16 January 2017.
  40. ^ a b "Board of directors - - Aviva plc". www.aviva.com. Retrieved 16 January 2017.
  41. ^ "Board of Directors". www.spotless.com. Archived from the original on 24 March 2017. Retrieved 16 January 2017. {{cite web}}: Unknown parameter |dead-url= ignored (|url-status= suggested) (help)
  42. ^ "Tennis Australia Board and Executive Team – About Tennis Australia - Tennis Australia". Tennis Australia. Retrieved 16 January 2017.
  43. ^ "About Washington H. Soul Pattinson". www.whsp.com.au. Retrieved 16 January 2017.
  44. ^ "Nicola M. Wakefield Evans". www.lendlease.com. Retrieved 16 January 2017.
  45. ^ "- Chief Executive Women". Chief Executive Women. Retrieved 16 January 2017.
  46. ^ a b http://www.modd.com.au, MODD Digital Design -. "The 1813 Holey Dollar - our first coin, rare & desirable". Coin Works. Archived from the original on 18 January 2017. Retrieved 17 January 2017. {{cite web}}: External link in |last= (help); Unknown parameter |dead-url= ignored (|url-status= suggested) (help)
  47. ^ "About | Holey dollar | Macquarie Group". www.macquarie.com. Retrieved 17 January 2017.
  48. ^ "Samuel slams Macquarie over telco scam". The Sydney Morning Herald. 1 November 2010.
  49. ^ "Macquarie 'transferred £2bn of debt' on to Thames Water's books". The Financial Times. 5 September 2017.
  50. ^ "How Macquarie bank left Thames Water with extra £2bn debt". The BBC. 5 September 2017.
  51. ^ "Macquarie sells stake in UK's biggest water firm". Financial Review. 15 March 2017. Retrieved 2 July 2018.
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