Quiet deals year hits Macquarie Capital’s fee revenue

Macquarie Group has signalled that the weaker market for mergers and acquisitions could hurt its annual results for its investment banking arm. Picture: Joel Carrett/AAP Image

Macquarie Group has signalled that the weaker market for mergers and acquisitions could hurt its annual results for its investment banking arm.

The Australian listed Macquarie told the market in its quarterly update on Tuesday that its investment banking unit, Macquarie Capital, completed 84 transactions globally valued at $92bn in the third quarter.

Fee revenue was strongly down on the prior corresponding period and prior period, with significant realisations in the comparative periods.

The Principal Finance credit portfolio stood at over $16bn, with more than $1bn deployed in the third quarter through focused investment in credit markets and bespoke financing solutions, the bank told the market.

But it warned in its market outlook that transaction activity is expected to be substantially down on a record 2022 financial year, with market conditions weakening in the financial year ending March 31.

The market was hit with a flurry of announcements about proposed mergers and acquisitions during 2021 amid the global pandemic in a period of low interest rates.

But announced deal activity ground almost to a halt during 2022.

Macquarie said investment-related income is expected to be broadly in line with the 2022 financial year, with increased revenue from growth in the Principal Finance credit portfolio, offset by lower revenue from asset realisations.

It said no material asset sales were expected in the March quarter, as balance sheet deployment in both debt and equity investments would continue.