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[SYDNEY] Macquarie Group Ltd has raised the most capital this year since 2009 after agreeing to buy Australia & New Zealand Banking Group Ltd's car dealer finance business.
Macquarie said Friday it raised A$400 million (S$407 million) in a share sale to institutions, pricing it at A$80 per share, to help pay for the acquisition. The offering comes on top of the A$670 million raised in March for the purchase of an aircraft portfolio and brings total proceeds this year to the highest since it amassed A$1.2 billion in six years, data compiled by Bloomberg show.
Its shares climbed 3.5 per cent to A$80.60, on course for its highest close in two months, at 10:34 am in Sydney.
The company's two acquisitions this year are emblematic of Macquarie Chief Executive Officer Nicholas Moore's focus on stable businesses to shelter the firm from the volatility of investment banking. While targeting businesses from mortgage lending to leasing has saddled the bank with higher capital requirements, it's put Macquarie on course for record full-year profit and driven its shares up 38 per cent this year.
"Acquisitions and capital raising are a sign of confidence," said Paul Xiradis, Ausbil Investment Management Ltd.'s chief executive officer, who oversees about US$8 billion including Macquarie shares. "While the deals may be capital intensive, they are businesses Macquarie is well entrenched in. It is also being done at a time the bank's profit is rising dramatically." On Thursday, the investment bank forecast profit in the six months ended Sept 30 to grow 55 per cent from a year earlier, boosting the estimate from 40 per cent previously amid higher performance fees. The firm is forecast to post record full-year net income of A$1.94 billion, according to the mean estimate of nine analysts surveyed by Bloomberg.
Macquarie said Thursday it needs A$800 million in initial capital for the purchase of ANZ Bank's Esanda unit and also plans to offer stock to shareholders after it announces its first-half results later this month.
Acquiring Esanda will give Macquarie A$7.8 billion in additional loans, taking its total motor-vehicle finance portfolio to about A$17 billion and adding 10 Australian cents per share to earnings in the first full year after the acquisition, it said. The loans comprise point-of-sale finance, funding for showroom stock and other Esanda-branded finance offered to car dealers.
"The planned transaction continues a shift in Macquarie Bank's business profile toward longer-dated and more capital- intensive assets," Ilya Serov, a senior credit officer at Moody's Investors Service, said in a statement.
While the bank reported surplus capital of A$2.4 billion as of June 30, the company preferred to maintain a buffer, CEO Moore said on a media call Thursday, as he signaled a willingness to raise more funds for acquisitions. Macquarie last sold shares in March to help finance the US$4 billion purchase of 90 passenger planes from AWAS Aviation Capital Ltd.
"With normal organic growth, we probably generate enough capital to support our business," Mr Moore said. "When we are going to take on a significant acquisition, we would look to raise capital."