Asian demand stokes infrastructure fund

Macquarie Group appears to be attracting solid interest out of Asia for its €2.6bn ($3.85bn) infrastructure fund.

Macquarie has grown to $496.9bn in assets under management.

Macquarie Group appears to be attracting solid interest out of Asia for its €2.6 billion ($3.85bn) infrastructure fund, fuelling bullish analysts’ views that the stock’s solid run is far from over.

According to CLSA analysts, Korean pension funds are piling into the new unlisted Macquarie European Infrastructure Fund 5, or MEIF5.

The fund would follow MEIF4, which closed in April 2013, with a higher than planned €2.7bn following strong demand for exposure to European assets, such as airports and energy networks.

The MEIF funds form part of the Macquarie Infrastructure and Real Assets business, or MIRA, that sits in the group’s biggest division by earnings, the asset management arm run by Shemara Wikramanayake.

Under the leadership of Ms Wikramanayake — widely regarded as a likely successor to chief Nicholas Moore — Macquarie has grown to $496.9bn in assets under management and the world’s largest infrastructure manager.

CLSA’s Brian Johnson said MEIF5 was a material development that represented a 7 per cent increase on MIRA’s $66.5bn of ­equity under management at the end of March.

He said Macquarie had indicated at the group’s annual general meeting in July that activity in MIRA was accelerating, with $2.8bn invested during the three months to June 30 across deals in infrastructure, real estate and agriculture around the world.

According to Korean reports, South Korea’s National Pension Service has committed €250 million to MEIF5, while others include Military Mutual Aid Association and Korea Scientists and Engineers Mutual-aid Association. A Macquarie spokeswoman declined to comment.

At the group’s AGM, Mr Moore said Macquarie’s annuity-style businesses, which represent more than 70 per cent of revenue, were performing well, with the asset management arm benefiting from higher base fees but lower performance fees, as previously flagged.

Mr Johnson said MIRA was a “standout generator” of value for shareholders, citing the “pipeline” of performance fees from funds established in the past decade and the ample cash pile to invest in new assets.

While some analysts warned that Macquarie’s earnings upgrade cycle could be ending, Mr Johnson retained his 12-month price target of $95.60, compared with $80.70 yesterday. “Macquarie is more than a ‘vanilla’ investment bank and is entering a prolonged upward earnings per share revision cycle,” he reiterated.