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Macquarie Group writes down A$684m in managed assets, co-investments(2)

The world's largest private manager of infrastructure assets also saw its fiscal 2009 half-year profit plummet 43% to A$604m. Its unlisted funds continued to post strong base and performance fees, while listed funds did not.

Macquarie Group, the largest private manager of infrastructure assets worldwide, wrote down A$684 million (€352 million; $444 million) worth of funds management assets and co-investments for its fiscal half-year ending 30 September. The write-down contributed to a 43 percent decline in its 2009 half-year profit.  

The write-down, part of a much larger A$1.14 billion in impairment charges and provisions for the period, included A$102 million from the Macquarie Communications Infrastructure Group, $48 million from the Macquarie International Infrastructure Fund and $41 million from Macquarie Infrastructure Company, all listed funds.

Nicholas Moore, Macquarie Group chief executive officer since late May, said in a statement that the write down resulted from “extreme market conditions” and stressed that “the underlying assets owned by the funds are performing in line with expectations and generating increasing cashflows”.

Further write downs from listed funds of approximately A$400 million are included in the group’s guidance for six month profit through 31 March 2009, which it expects to be “broadly in line” with the first half result of A$604 million – a 43 percent fall from last year’s half-year result that ended a 15-year streak of consecutively higher profits.

Macquarie Capital, which manages 35 listed and unlisted funds and carries on broader investment banking activities, likewise saw a fall in profit of 43 percent over the same period last year to A$869 million, or more than half the group total before write offs and one off charges.

Lower base fees across Macquarie Capital, down 5 percent to A$242.7 million over the same period last year, contributed to the decrease as several of its most prominent listed vehicles reported sharply lower base fees.

Among them were Sydney Stock Exchange-listed Macquarie Airports, Macquarie Communications Infrastructure Group, Macquarie Infrastructure Group and New York Stock Exchange-listed Macquarie Infrastructure Company.

Base fees for Macquarie Capital's listed funds are based on a blended calculation that takes into account their market capitalisation and borrowings, both of which been in decline for listed infrastructure funds generally since the onset of the global credit crisis. As of 30 September, it managed nine listed funds on five stock exchanges worldwide, according to the latest Macquarie Specialist Funds Quarterly report.

Base fees from Macquarie Capital’s unlisted funds such as Macquarie Infrastructure Partners II and Macquarie European Infrastructure Fund III partially offset the decreases from listed base fees, rising 26.5 percent to A$154.6 million over the same period last year.

The increase reflected Macquarie Capital’s continued fundraising effort within its unlisted funds, which received capital commitments of A$2.5 billion over the period, according to the Macquarie Specialist Funds Quarterly.

Likewise, while many of Macquarie Capital’s listed funds did not record performance fees over the period, performance fees from unlisted funds more than doubled to A$125.9 million.

For both its listed and unlisted vehicles and related consortia, Macquarie Capital Funds invested A$2.3 billion of equity in the six months to 30 September, according to the Macquarie Specialist Funds Quarterly.