Macquarie Group's bid for Qube to test new laws and spark ports battle
After months of talks, the investment bank reached a preliminary deal that could see its asset management arm take control of Qube. Macquarie plans to push ahead with due diligence and decide whether to proceed with the buyout by early February.
That date matters. Just as the timing is no accident. The deal is shaping up as the first big test of Treasurer Jim Chalmers’ shake-up of competition rules that kick off in January.
The new rules require mandatory notification of mergers, along with a fast-tracked approvals process that could see an initial decision on transactions within 30 days. Although if a more in-depth review is required this will take up to three months.
Macquarie has made an indicative offer of $5.20 a share for Qube, after an initial flurry, a completion discount is starting to drift in to Qube’s shares which are now trading at a 12 per cent below the offer price. Its not significant yet, but the gap has been getting wider over the past week.
The ACCC’s approval test still centres on whether any deal could substantially lessen competition, but if a transaction is knocked back, businesses can apply for approval based on likely public benefit. The new rules are aimed at getting more deals done quickly and with greater transparency.
If Qube agrees to the buyout, Macquarie Asset Management will emerge as the dominant player in the state’s two key ports – Botany and Newcastle.
Qube owns 50 per cent of the former Chris Corrigan stevedoring vehicle Patrick, which ranks as one of Botany’s biggest container operators. Meanwhile, Macquarie’s Infrastructure Fund owns 50 per cent of the Port of Newcastle. Combined, this could hand Macquarie significant east coast shipping clout.
The potential linkages are expected to come under the microscope from the competition regulator, which is still scarred by NSW’s ports privatisation disaster.
The ACCC launched and spectacularly lost a landmark legal challenge against the NSW government over the structure of the privatisation of the state’s ports.
The port sale of Botany and Port Kembla delivered a windfall for the state, bringing in billions, but laid a shaky foundation for the economy in the long run by locking in a monopoly and pushing up trade costs.
At the heart of the ACCC’s concerns was a 50-year clause that essentially capped how much container cargo the Port of Newcastle could handle. The clause required Newcastle to compensate Sydney’s main container port at Botany if it exceeded the cap – effectively protecting Botany’s stranglehold on containers. Newcastle is mostly a bulk port for coal and wheat and had been looking to diversify.
Following the ACCC defeat, an independent member’s bill in 2022 overturned the Newcastle cap after securing support from the Nationals, then part of the NSW Perrottet coalition government. This paved the way for container cargo to finally start moving through Newcastle at scale.
Qube has been gradually building its Newcastle footprint. Firstly through the 2021 deal to acquire the Newcastle Agri terminal, which sailed through without ACCC approval. Then in 2023, the ACCC launched a review of Qube’s move on family-owned Newcastle Stevedores. But Qube later dropped the bid.
ACCC chair Gina Cass-Gottlieb has raised concerns about Qube’s vertical integration of port services – bringing together stevedoring via Patrick with warehousing and rail transport. She’s also called for more competition in waterfront and shipping, warning that without it, the ripple effects can reach across the economy.
Macquarie now has due diligence underway, with UBS-advised Qube making clear that any transaction hinges on winning ACCC approval.
Although data centres and digitisation has been getting much of the attention from Macquarie, the proposed buyout shows that traditional infrastructure remains firmly on its radar. Macquarie has form in ports, with acquisitions across New York and New Jersey, not to mention Newcastle.
Macquarie will run due diligence over Qube until February 1.
Small big bank
Macquarie’s digital bank has crossed an unexpected threshold in APRA’s proposed regulatory overhaul – landing itself squarely in the top tier alongside the major banks, while its smaller rivals are in line for some regulatory relief.
The banking watchdog has explicitly confirmed that Macquarie will likely be captured by the new “Most Significant Financial Institution” designation, reserved for banks with assets exceeding $300bn. Macquarie’s fast-growing digital bank only recently passed this mark, reaching $316bn in assets in October, including a loan book of $184bn.
This places Macquarie in an exclusive club with the big four, although it's a big gap between five and the other four. ANZ holds $760bn in assets, NAB has $977bn, while both Westpac and Commonwealth Bank exceed $1.1 trillion.
APRA’s new middle tier of “Significant Financial Institution” captures banks between $30bn to $300bn for lighter regulation than the mega club. This takes in Bendigo and BOQ, AMP and Heritage, but Judo Bank doesn’t make the mid-tier mark which will work in its favour.
International players like ING and HSBC, while small here, will be assessed on a basket of measures of their global parent such as size, sophistication, and main regulator.
The prize for the mid-tier banks is to be able to operate under an internal ratings-based accreditation for capital like the big four and Macquarie use. Under this, banks can use sophisticated internal models to calculate credit risk, typically resulting in lower capital requirements. Until now, the resource intensity of securing IRB accreditation has kept it beyond reach for regional players. While IRB is not tied to the proposed tiers, APRA has previously said it is investigating ways to make it easier for smaller banks to qualify.
For institutions below $30bn – mostly credit unions – the regulatory burden lightens further still under APRA’s plan. The explicit aim is proportionality: calibrating prudential oversight to actual systemic risk rather than applying uniform requirements across vastly different institutions.
Small banks have been complaining for years they are being regulated under a one-sized fits all approach, which is pushing them out of the market. The new rules are all about proportionality and acknowledge that not all banks pose the same systemic risk.
Regulatory relief alone is one step but it won’t overcome structural advantages in funding costs, technology investment, and distribution networks that the big four enjoy.
APRA will run a review on the planned overhaul over coming months, with the proposals likely to be finalised by the end of next year.
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An almighty waterfront battle is once again simmering in NSW and Macquarie Group is in the middle of it through its bumper $9.2bn tilt at port transport operator Qube.