Macquarie Group is raising A$1bn ($675.5m) in fresh equity to support increased investment in the renewables, technology and infrastructure sectors and to give it additional flexibility to pursue new opportunities.
The Australian bank also updated its earnings guidance on Wednesday, saying it still expected full-year earnings for the financial year ending June 30, 2020 to be slightly down on 2019. This was in spite of a strong start to the 2020 financial year, with first-half earnings expected to be up by 10 per cent.
Macquarie said it expected the second half of 2020 to be down on the same period in 2019, when its market-facing businesses performed very well.
Shemara Wikramanayake, Macquarie chief executive, said raising fresh capital through an institutional placing enabled the bank to maintain strategic flexibility in light of new regulations, which had increased capital requirements.
“We have continued to identify opportunities to invest capital with the potential for attractive risk-adjusted returns for shareholders over the medium term,” she said.
Macquarie expected to invest A$1bn in net capital in the current quarter ended September 30 and had several major projects under way, including its acquisition of a 40 per cent stake in the UK’s largest offshore wind farm in East Anglia in a deal worth £1.63bn.
The institutional placement represents about 2.5 per cent of Macquarie’s issued share capital.
Nathan Zaia, analyst at Morningstar, said the capital raising was surprising given that Macquarie already had about A$5bn of surplus capital on its balance sheet. But he said there was a lot of uncertainty in economic and regulatory markets and the group was clearly confident it had identified opportunities for investment.
“Taking away the uncertainty of not having the capital to act in the future does make sense . . . It also means you don’t get caught having to tap shareholders in weaker markets, where Macquarie’s share price would obviously be lower,” Mr Zaia said.
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