Macquarie Group hastens driveto renewable energy

Macquarie Group plans to ramp up its renewables investments to take advantage of the growing tide of sentiment.

Macquarie Capital has built up an $14.8 billion renewable energy portfolio over the past seven years.

Macquarie Group plans to ramp up its global renewable energy investments to take advantage of the growing tide of positive sentiment from some governments, but has warned that Australia needs to catch up the rest of the world.

The bank posted a record $2.2 billion profit for the past year, and one of its standout businesses was Macquarie Capital, which boosted its operating income by 2 per cent to $1.2bn.

The division’s net profit contribution was $483 million, up 7 per cent on the same time last year. The biggest deal recently was Macquarie’s decision to spend almost $4bn buying the Green Investment Bank from the British government.

Macquarie Capital has built up an £8.5bn ($14.8bn) renewable energy portfolio over the past seven years, with nearly a quarter of that made in the past six months.

Macquarie recently bought a 25 per cent stake in the £1.6bn 573 MW Race Bank offshore wind farm and has built up solar, tidal and waste and bioenergy assets.

Macquarie Capital head Tim Bishop said Australia was starting to develop major renewable energy assets, which were becoming attractive investments, but the market remained well behind ­Europe.

Nearly half Macquarie’s green energy portfolio is invested in Britain. “In Australia, the green energy levels are slower than in Europe but we are seeing evidence of that picking up,” Mr Bishop told The Australian.

“We are seeing renewable energy lending starting to increase. We are becoming optimistic about the opportunities in Australia but Europe, and especially Germany, are leading the world.”

The GIB purchase is expected to drive Macquarie’s investments in Britain and across Europe, and was the bank’s largest acquisition in recent times.

Macquarie’s diversification of its revenue is extending, with 63 per cent of its income earned overseas primarily in Europe and the US. With GIB now under its ownership, Mr Bishop said Macquarie was likely to invest in more early-stage green energy projects and remain a shareholder until the ­assets were developed, before on-selling them.

Under its new ownership structure, GIB will sit within Macquarie Capital and the Macquarie Real Infrastructure and Assets business, which is one of the world’s largest infrastructure investment vehicles.

Macquarie Capital houses the bank’s investment banking advisory businesses, which is considered one of the top three in Australia alongside traditional ­rivals UBS and Goldman Sachs.

Mr Bishop said Australian economic and financial conditions were currently good for large corporate transactions to occur as interest rates were low and equity markets strong.

Macquarie is considered a leading prospect to buy the 50.4 per cent stake in Endeavour Energy, which is being sold by the NSW government. An outcome of the deal is expected within the next few days.

“The (M&A) environment is good in Australia, it feels better today than it did at the same time last year,” Mr Bishop said.