Sky News reported Macquarie was in the early stages of weighing a bid, and the company has declined to comment. Beefing up in asset management does make strategic sense and Macquarie has the capital to spearhead a bid.
A December quarter trading update earlier this month showed Macquarie had group surplus capital of $12.5bn, although new “unquestionably strong” capital requirements that came into effect in January will reduce that to $10.1bn.
Across its investment funds, Macquarie has $31.6bn to deploy.
Macquarie CEO Shemara Wikramanayake this month said the high levels of capital on the group’s balance sheet reflected the uncertain macroeconomic environment and provided scope for Macquarie to pounce on acquisition opportunities.
“We’re seeing a lot of dislocation potentially happening and in that sort of environment it behoves us to have capital in case there may be acquisitions, for example in the asset manager,” she said.
If Macquarie did get serious about a bid for M&G it would follow sizeable acquisitions by its asset management unit in the past three years, including the $US1.7bn ($2.5bn) Waddell & Reed acquisition and the purchase of AMP’s global equities and fixed income unit. During the wash-up of the financial crisis, Macquarie closed several marquee deals including the purchase of US firm Delaware Investments, which delivered the buyer $US125bn in assets under management.
Jefferies banking analyst Brian Johnson said of the potential deal: “Macquarie has a product offering gap in UK/European equities/fixed interests so M&G’s €350bn of AUM (assets under management) intuitively appeals. However, there would not be a major opportunity to strip out costs and M&G’s substantial insurance operations would be of no interest to Macquarie. Macquarie will be maintaining active M&A briefs on most global asset managers.”
While scouring the globe for suitable acquisition opportunities, Macquarie notably doesn’t tend to get serious unless it believes the target is available at a compelling price. Wikramanayake and her predecessors have generally been reluctant to get involved in bidding wars with other would-be suitors, albeit there are a few high- profile examples of where Macquarie has pursued assets aggressively. Those would include energy company Alinta in the lead up to the financial crisis – which Macquarie eventually retreated from – and more recently one of Macquarie’s funds was involved in a competitive tussle for orchard landlord Vitalharvest. The Macquarie fund acquired Vitalharvest in 2021.
More on Macquarie’s successes and failures on the deal making scene can be found in The Millionaires’ Factory, a book out this week that this columnist co-wrote.
Lendi ructions
What is going on at mortgage broking group Lendi? It subsumed bigger rival Aussie Home Loans in 2021 and the place – despite having three large bank shareholders – appears to be quite chaotic.
A sweeping round of redundancies is just the latest sign of trouble. Lendi chief David Hyman and shareholders including Commonwealth Bank, Macquarie and a unit of ANZ need to ensure they don’t lose the value in the Aussie Home Loans brand established by mortgage market stalwart John Symond.
It was the first challenger brand to shake up the mortgage market with the catch cry: “At Aussie we’ll save you”.
Mergers are fraught with operational and integration challenges and this transaction appears no different.
Value destruction is a tricky risk to navigate and no doubt Lendi’s board will be closely overseeing how 2023 plays out.
Lendi’s woes have included technology issues and a split between its founders.
The broker told staff in November that two of its four founders would be leaving the group, due to differing management approaches.
As Bank of Queensland knows too well, managing a franchise network is not easy either and Lendi is also seeking to smooth over concerns about potential cuts to commission sharing arrangements. They may see franchisees receiving less of the split if Lendi provides more support in managing a pool of potential leads that are shared with brokers.
Jarden watch
In the lead up to Jarden’s March 31 financial year end, this columnist has been informed some staff cuts are in the works. It comes amid a softer period for deal making and headcount reductions at a string of rival investment banks including Credit Suisse and Goldman Sachs.
The talk around job cuts comes as Jarden’s chief executive James Lee this week signalled his intention to leave the firm at the end of its financial year.
This column understands there may also have been some bad blood between Lee and those at the helm of the Australian operations due to the firm’s aggressive scaling up in this market, particularly in Melbourne. The firm’s Melbourne office last year picked up a trio of investment bankers from Credit Suisse as it continued its expansion.
The formal word out of Jarden is there’s nothing to see here. So let’s see what transpires.
A spokeswoman said: “We have a growth bias as a new firm in Australia and an established firm in NZ and are actively hiring in the current market.“
Jarden in October separated its wealth and investment bank businesses. It appointed Aidan Allen and Sarah Rennie to lead the investment bank, and Malcolm Jackson to run wealth and asset management. Those roles report directly to Jarden’s board.
Bad loans set to rise at Bank of Queensland
The $4.30bn lender has warned that loan impairments are likely to increase over the coming six months as uncertainty weighs on business and the economy following better than expected earnings.
Even with Bally’s bailout, Star’s condition is still critical
Star Entertainment chief executive Steve McCann’s big balancing act to save the struggling casino operator is not over yet. Not by a long shot.
Macquarie Group’s appetite for acquisitions tends to increase in times of macroeconomic uncertainty and volatility, which perhaps underscores reports of a £5.2bn ($9.2bn) tilt at London funds management firm M&G.