Macquarie kicks off $1bn raising to fund renewables, tech and infrastructure investments

Macquarie has launched a $1bn capital raising as it boosted its first-half profit guidance.

The Macquarie Group logo. Picture: Bloomberg

Macquarie Group has kicked off a $1 billion capital raising to help fund investments in renewable energy, technology and infrastructure as it also boosted its first-half profit guidance.

Macquarie (MQG) said it was undertaking a non-underwritten $1bn placement to institutional investors and a share purchase plan for retail investors.

“We have continued to identify opportunities to invest capital with the potential for attractive risk-adjusted returns for shareholders over the medium term,” said chief executive Shemara Wikramanayake. “Raising new capital at this point allows us to maintain strategic flexibility in light of these opportunities.”

Macquarie also said interim earnings, for the six months ended September 30, would be up 10 per cent on the same period last year but lower than the preceding six months.

Macquarie’s last interim profit came in at $1.3bn, suggesting this year’s first-half result will be at least $1.43bn. The second-half profit result was $1.67bn.

The upgrade and the raising — which point to a bumper investment pipeline — will have analysts recutting their Macquarie earnings numbers.

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Ms Wikramanayake said the raising would help to fund growth in Macquarie’s mortgage book but would mostly be ploughed into funding a “good pipeline” of investments.

“We see a lot of opportunities to grow that global alternatives division,” she told investors and analysts on a call on Wednesday. “It (the raising amount) should be enough to support the pipeline,” Wikramanayake added saying she did not expect to tap investors for further capital in the near term.

The capital raising sees the issue of about 8.4 million shares, and the price will be determined via a bookbuild

Macquarie said the raising followed recent net capital investment across most regions, primarily by its investment banking arm in the renewables, technology and infrastructure sectors. It also reflects “an anticipated increase” in capital deployment by Macquarie Asset Management and the investment banking division.

Despite the upgrade to first half guidance, Macquarie stuck to its 2020 full-year expectations that profit will be “slightly down” on this year.

Macquarie’s profit for the 12 months ended March 31 printed at a record $2.98bn.

The group also reiterated that the implementation of the standardised approach for measuring counterparty credit risk exposures would result in an estimated $600m increase in capital requirements for the commodities and global markets unit.

“So far they have invested in a UK wind farm and further investment in a Taiwanese wind farm and expect to complete other deals in renewables, technology and infrastructure sectors in the current quarter ended 30 September,” analysts at Citigroup said in a note to clients

“Secondly APRA’s change in relation to Credit Counterparties SA-CCR2 will result in an estimated $600m increase in capital requirements for Commodities and Global Market or another 77 basis points of CET1 (common equity tier one) capital. This is a much smaller line than for the other major banks with proportionately smaller trading businesses (eg for ANZ/WBC this is 15 to 20 bps of capital).”

The raising is not expected to impact Macquarie’s credit rating.

The non-underwritten share purchase plan has a maximum application size of $15,000 per eligible investors. New shares issued under the plan will be offered at the lower of the placement price; and a 1 per cent discount to the volume-weight average price of Macquarie shares during the five ASX trading days immediately before and including the plan’s closing date.