Polish port sale tipped to boost Macquarie earnings

Macquarie’s effort to sell its controlling stake in a €1.4 billion ($2.3bn) Polish port is set to boost earnings.

Macquarie’s effort to sell its controlling stake in a €1.4 billion ($2.3bn) Polish port is set to provide the asset management giant with another earnings boost in the year ahead.

Macquarie has been weighing bids for its 64 per cent stake in the deep sea container port DCT Gdansk Terminal, including an offer from a consortium of Singapore’s PSA International, Australia’s IFM and Poland’s state development fund, according to international news reports.

CLSA senior banking analyst Brian Johnson yesterday said Macquarie stood to make a “fairly substantial gain” on its 2005 greenfield investment in the port terminal.

“This investment has been phenomenal for what it has achieved,” Mr Johnson said.

“It is further evidence of this massive pipeline (of asset divestments and potential fees) coming through.”

The port’s website notes that volumes were 162,000 20-foot equivalent units (TEUs) in 2009, a figure that swelled to 1,593,761 TEUs in 2017.

Macquarie’s investment was made via its second unlisted global infrastructure fund, which still holds separate investments in British transmission services group Arqiva and listed New Zealand company Oceania Healthcare.

However, Mr Johnson said it was difficult to calculate the quantum of any performance fees Macquarie would earn on the port sale until the other two remaining assets were divested. “I don’t think they need to recognise a performance fee,” he said.

Shaw and Partners senior analyst Brett Le Mesurier said Macquarie stood to make a “very tidy” profit on the port sale in Poland.

Macquarie earns base fees and performance fees on its stable of infrastructure funds. Macquarie, including its infrastructure funds, has assets under management of $551 billion.

DCT Gdansk was Macquarie Infrastructure and Real Assets’ first investment in Poland.

The potential asset sale is another boon for newly installed Macquarie chief executive Shemara Wikramanayake, who took over from longstanding boss Nicholas Moore in December.

Macquarie upgraded its earnings guidance twice in November, almost ensuring a record $3bn-plus annual profit, buoyed by asset sales including gains on the sale of Quadrant Energy.

In the latest upgrade, Macquarie said it expected profit for the 12 months ended March 31 to eclipse 2018’s $2.56bn by 15 per cent. At its interim results earlier in November, guidance was ratcheted up to an increase of 10 per cent.

But while the Quadrant deal is factored in, investors were unclear whether Macquarie’s latest earnings guidance included the group’s expected gain on the sale of its stake in online property settlement firm PEXA. Analysts expect the divestment of Macquarie’s 23.9 per cent holding to deliver a $300 million pre-tax and bonus gain. PEXA was bought by a consortium led by ASX-listed Link.

The expected Polish divestment will add to the mix if it completes by Macquarie’s year-end on March 31.

Interestingly, IFM — which manages $113bn — has a track record in Poland after acquiring heating provider and cogeneration business owner Veolia Energia Polska in 2006. But it will face competition from other global players, including a potential offer for DCT Gdansk by Chinese state-owned shipping group COSCO.

Analysts will be closely watching Macquarie’s divestment pipeline in early 2019, including its European and Australian infrastructure funds and other strategic stakes.

Locally, Macquarie in December sold its portfolio of 90,000 smart meters to private equity-backed intelliHUB, and another company that could be divested in coming months is initial public offering candidate and software group Nuix.

Macquarie owns about 70 per cent of Nuix, which was founded in 2000 by a group of computer scientists.

The next date on Macquarie’s calendar is its annual operational briefing in February. Its full-year results are handed down in May.