Macquarie Group has kicked off a $1.6 billion raise, with the bank aiming to spread the capital across three of its subsidiaries, intending to make investments and comply with regulatory change.
The raise is occurring the form of an institutional placement, expected to raise around $1 billion, in addition to a share purchase plan being offered to shareholders afterwards, which could produce a further $600 million.
Macquarie indicated to shareholders it will be investing across the renewables, technology and infrastructure sectors through both the Macquarie Capital and Asset Management subsidiaries.
In particular, it noted significant investments including wind farms offshore from the UK and in Taiwan.
Macquarie said it is anticipating approximately $1 billion in net capital investment in the current quarter ending 30 September.
The investments are expected to primarily occur through Macquarie Capital.
Further, due to a new standardised approach being implemented by APRA for measuring counterparty credit risk exposures, Macquarie’s Commodities and Global Markets business will have an estimated $600 million increase in capital requirements.
Shemara Wikramayake, chief executive, Macquarie said: “We have continued to identify opportunities to invest capital with the potential for attractive risk-adjusted returns for shareholders over the medium term.”
“Raising new capital at this point allows us to maintain strategic flexibility in light of these opportunities.”
Alongside the capital raise, the bank provided an update on its outlook. It confirmed its previous guidance given at its annual meeting in July, continuing to expect the group’s result for the full year to be slightly down in financial year 2019.
Macquarie anticipates the first half of FY20 is will be up by 10 per cent on the prior corresponding period, but down on its strong second half, which had benefitted from increased contributions from the market-facing businesses.
The outlook remains subject to shaky market conditions, regulatory changes and tax uncertainties, among other factors.
Macquarie generated a net profit of $2.9 billion in FY19, up 17 per cent from the year before.
The bank paused trading before it opened the capital raise.
The placement price for is being determined through a bookbuild process, with the placement to represent around 2.5 per cent of total existing Macquarie shares on issue.
Macquarie will offer eligible shareholders an opportunity to participate in a non-underwritten share purchase plan with a maximum application size of $15,000 per eligible shareholder.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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