- After half-year revenues more than doubled to $2.04 billion, Macquarie Group (MQG) is looking to raise more than $1.5 billion in additional capital
- The group announced a non-underwritten institutional placement for $1.5 billion, which would be followed by a non-underwritten share purchase programme (SPP)
- Managing Director and CEO Shemara Wikramanayake says the first half saw a significant increase in net profit contribution from all its operating groups
- The group had a capital surplus of $8.4 billion at September 30, 2021, down from $8.8 billion on March 31, 2021
- Shares in Macquarie Group were put in a halt today and last traded at $197.83 on Thursday, October 28
Macquarie Group (MQG) is looking to raise more than $1.5 billion in additional capital to fund new prospects and meet stricter capital requirements after half-year earnings more than doubled to $2.04 billion.
The group unveiled the non-underwritten institutional placement this morning, which will be followed by a separate non-underwritten share purchase plan (SPP).
The financing will provide Macquarie greater freedom to engage in new opportunities with attractive risk-adjusted returns while preserving an adequate capital surplus.
Managing Director and CEO Shemara Wikramanayake said the first half saw a significant increase in net profit contribution from all its operating groups.
“Macquarie has experienced a period of sustained and material growth in capital requirements across our annuity-style and markets-facing activities,” she said.
“Having deployed $5.5 billion of capital over 2H21 and 1H22, we continue to see a strong pipeline of opportunities. Raising new capital provides us with additional flexibility to invest in new opportunities where the expected risk-adjusted returns are attractive to our shareholders, while maintaining an appropriate capital surplus.”
Half year results
Annuity-style operations carried out by Macquarie Asset Management (MAM), Banking and Financial Services (BFS), and certain companies in Commodities and Global Markets (CGM) provided a total net profit contribution of more than $2.5 billion in 1H22, up 57 per cent from 1H21.
Markets-facing activities, which are carried out by Macquarie Capital and the majority of CGM companies, generated a combined net profit contribution of almost $1.5 billion, an increase of 118 per cent compared to 1H21.
Net operating income of $7.8 billion was up 41 per cent on 1H21, while operating costs of $5 billion were up 19 per cent. International income accounted for 72 per cent of Macquarie’s overall revenue.
Income tax expense of $603 million increased from $275 million in the first half of the year. The effective tax rate in 1H22 was 22.8 per cent.
The increase in the effective tax rate compared to the first half of the year was primarily due to the regional composition and type of profits.
The group had a capital surplus of $8.4 billion of September 30, 2021, down from $8.8 billion on March 31, 2021.
Total client deposits grew from $84 billion on March 31, 2021, to $91.5 billion on September 30, 2021.
Capital raising
The non-underwritten placement of fully paid ordinary shares announced today is projected to raise about $1.5 billion.
The placement price will be determined through a bookbuilding process, which will begin today at $190 per share, reflecting a four per cent discount to the previous day’s closing price of $197.83 on Thursday, October 28, 2021.
The Placement is projected to result in the issuance of 7.9 million shares, representing approximately 2.1 per cent of the current Macquarie shares on issue.
Macquarie will also make a non-underwritten SPP available to eligible shareholders in Australia and New Zealand, with a maximum application amount of $30,000 per person.
Shares in Macquarie Group were put in a halt today and last traded at $197.83 on Thursday, October 28.