Macquarie Bank, Australia’s largest investment bank, is pushing ahead with its global expansion plans, announcing it will raise A$996m (US$760m) through the listing of a newly created international media fund.
Macquarie Media Group, which holds 85 commercial radio licences in several Australian cities, plans to sell 195.25m shares valued between A$4.70 and A$5.05 each, payable in two tranches, with the first on sale to retail investors from October 18.
The move comes ahead of expected changes to Australia’s media law next year that will allow more room for mergers and acquisitions in the sector.
Tim Hughes, chairman of Macquarie Media, told reporters the media fund would target assets that had stable earnings, strong cashflows and market positions protected by high competitive barriers.
“We are not going to be a passive portfolio investor,” he said, adding that the fund would seek controlling interests in its investments, or at least “significant influence” in the acquired assets.
Using money raised from the first tranche, the new fund would be debt-free upon listing, which Mr Hughes said would help it “capitalise on opportunities that meet its investment criteria”. The fund is eyeing media assets in the UK, North America and Asia.
Macquarie declined to outline specific targets, although it is understood to be also interested in adding Australian regional television operations to its domestic radio assets.
Macquarie’s sales pitch reflects the underlying popularity of the “Macquarie model” with investors, under which the group buys an asset and then bundles it into a listed trust fund that offers predictable returns.
Macquarie will retain 20 per cent equity in the new media fund and will reap a 1.5 per cent management fee and a 20 per cent performance fee, linked to real returns of 6 per cent in the media fund.
Luke Sinclair, at fund manager Invesco, said investors are “happy to accept” Macquarie’s fees provided the returns on its funds continue to beat the market. The media fund contains a new management fee that will pay Macquarie ongoing compensation if the fund is taken over.
Macquarie has forecast an annualised yield of between 7.5 per cent and 8.6 per cent for the year to June 30, 2006 based on a multiple of 11.6 to 13.4 times earnings before interest, tax depreciation and amortisation.
Macquarie manages assets as diverse as Sydney Airport, several US toll roads, a French wind farm and Chinese shopping centres.
The bookrunner and sole lead manager for the IPO is Macquarie Equity Capital Markets. ABN AMRO Rothschild, JPMorgan Australia and UBS are co-lead managers.
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