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Asset and Infrastructure Group |
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The Asset and Infrastructure Group continued to develop in its Australian and international markets. The Group arranged financing for in excess of $20 billion of assets during the year, making it one of the largest groups of its kind in the world. It achieved another record result in the year to 31 March 2001 and was again the largest contributor to the Bank’s result. |
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The Project and Structured Finance Division originates and advises on large asset financings. Its activities include project and infrastructure finance transactions, cross-border leasing and structured finance. |
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The Division’s leading position in these markets was recognised by industry publication Privatisation International, which named it No.1 Australasia Infrastructure Financial Adviser 2000 by value of closed transactions and No.2 Global Infrastructure Financial Adviser 2000 by total number of mandates. The Division also received accolades from Project Finance International in its 2000 league tables, once again being ranked No.1 in Asia Pacific and No.2 globally by number of advisory mandates. |
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The Division continued to expand its international presence with new offices in Frankfurt, Seoul and Cape Town. It now has offices in Australia, the United Kingdom, New Zealand, South Korea, Japan, Hong Kong, Malaysia, South Africa, North America and Europe. In a number of locations the product mix was expanded, with leveraged leasing in Hong Kong and project finance in Japan, for example. |
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In October 2000 the Division demonstrated its commitment to growth by acquiring the Portland Group, a United Kingdom-based boutique consultancy specialising in airports. The acquisition forms the basis of an Airport Group, which is involved in establishing a US$500 million specialised airport fund. |
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Project finance highlights included: |
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advising, developing and lead arranging for the ABB/Powerlink/Macquarie Bank consortium on its $938 million acquisition of ElectraNet, the South Australian electricity transmission assets |
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advising, arranging and underwriting for Nextgen on the construction, operation and project financing of its $853 million Fibre Cable. Equity and debt were raised on a project finance basis without pre-sales |
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advising National Express on the $713 million VIRTUE Trust financing of new rolling stock for Bayside Trains and Swanston Trams in Victoria (INSTO magazine’s Structured Deal of the Year) |
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advising Intergen in its successful bid for Shell Coal’s 50 per cent stake in the Callide C Power Station |
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advising AGL on the creation of the $800 million ActewAGL Joint Venture (combining the AGL gas network and retail business in the ACT region with the ACTEW electricity network and retail business in the ACT) |
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acquiring Bristol International Airport (in conjunction with Cintra, Concesiones de Infraestructuras de Transporte, S.A.). The Division was involved in airport strategy and business plan advice through the Portland Group’s expertise |
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advising Tenaga Nasional on the 40 per cent sale of the Kapar Power Station in Malaysia |
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advising Intria Berhad, Kuala Lumpur Sentral and Binaring Satellite Systems in Malaysia. The Division raised a combined total of RM2.9 billion in debt financing. |
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The Division remained market leader in cross-border leasing. The value of leases arranged exceeded $11 billion through the United States, Japan and (for the first time) Hong Kong, and included: |
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electricity transmission assets for Powerlink Electricity/ Queensland Treasury Corporation |
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multiple aircraft for Lufthansa, Qantas, Singapore Airlines, Cathay Pacific, Austrian Airlines and Aer Lingus |
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telecommunications equipment for France Telecom, Telecom New Zealand, Telstra and British Telecom |
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telecommunications ducting equipment for Swisscom |
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rolling stock for Austrian Rail |
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buses for New World First Bus Services (Hong Kong), Santa Clara (California) and Austrian Post |
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ferries for New World First Ferry Services |
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rail facilities for Belgian Rail. |
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The Division’s structured finance business enjoyed a record year. It worked on a number of large transactions and added to its investment product range. Highlights included: |
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a new issue of infrastructure bonds |
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an equity raising of more than $16 million for Macquarie Film Corporation |
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an issue of Land Transport Notes, a new debt instrument receiving concessional treatment under the Income Tax Assessment Act |
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the development and sale of units in the Macquarie IT 2000 Trust, an equity investment in leased IT equipment |
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the establishment of MP Structured Finance Fund (via a joint venture). |
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The Infrastructure and Specialised Funds Division manages a range of investments in infrastructure assets including: |
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Macquarie Infrastructure Group (MIG), an ASX-listed top-50 company with a market capitalisation of approximately $2.5 billion at 31 March 2001 |
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the listed Horizon Energy Group |
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Hills Motorway Trust, owner of the M2 Motorway in Sydney |
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High Yield Infrastructure Debt Trust, with $135 million in funds under management |
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the $260 million Global Infrastructure Fund, a new closed-end fund that invests in infrastructure assets in OECD countries |
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the South Africa Infrastructure Fund (via a joint venture). The fund invests in sub-Saharan Africa infrastructure assets. |
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A highlight of the year was MIG reaching financial close on the Midland Expressway, the United Kingdom’s first private toll road. Other key MIG events included: |
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$154 million purchase of a controlling interest in Sydney’s M4 Motorway |
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purchase of an additional 2.95 per cent in the Airport Motorway Group, owner of the M1 Motorway in Sydney |
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successful sale of MIG’s interest in the United Kingdom Ministry of Defence and the Meridian Hospital Project Finance Initiative contracts. |
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During the period the Division established the wholesale Global Infrastructure Fund (GIF). To date, GIF has made three investments: |
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purchase of 100 per cent of the US Detroit-Windsor Tunnel Company |
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equity investment in Nextgen |
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purchase of a significant interest in Reef Networks, a fibre optic cable between Brisbane and Cairns. |
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The Division also manages a $100 million investment in the United Kingdom’s Bristol Airport. This is intended to be a seed asset in an airport fund to be established by Macquarie. |
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Macquarie Capital is responsible for the Group’s investment in industries where earnings flow from the use of assets or infrastructure. The Division is continually examining opportunities to grow the portfolio organically or through acquisitions. At 31 March 2001 the portfolio of assets exceeded $2.6 billion. |
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Some highlights of the year included: |
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commencement of IT operating-lease finance in South Korea |
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launch of D-Auction, a B2B internet auction website primarily for motor vehicles |
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establishment of MacLease, the automation of lease origination, approvals and documentation between Macquarie and its clients. |
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Macquarie Capital incorporates the Macquarie IT and Macquarie Leasing businesses. Macquarie IT is one of the largest independent providers of IT operating leases to the government and corporate market in the region. It saw continued profitable expansion of its leasing book. Macquarie Leasing provides capital for general equipment finance and saw strong growth in receivables, mainly in vehicles. Credit quality continued to remain high with losses well within industry norms. |
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Forty-seven research and development syndicates were wound up over the last year (including seven in which Macquarie was the majority investor). A significant number of the remaining 39 syndicates are expected to wind up in the next 12 months. |
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A number of the syndicates are being reviewed by the Australian Taxation Office and litigation is likely in respect of at least one. While the final outcome is uncertain, Macquarie believes that any adverse impact would not be material. |
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Macquarie Technology Investment Banking provides advisory services throughout the business lifecycle to entrepreneurs building companies across a range of technology sectors (including e-business, communications infrastructure, software and life sciences). |
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Despite a difficult year in technology markets the Division was instrumental in several fund raisings for clients, including Thrombogenix and Intellisol. |
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The Division’s advisory business is complemented by the venture capital provided through Macquarie Technology Ventures (MTV). MTV is manager of the $48 million Macquarie Technology Funds 1A & 1B (MTF) and the soon-to-be-established Macquarie Technology Fund 2, and investment adviser to the $30 million Acer Technology Partners Fund. |
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MTV continued to identify new investments for MTF, adding Neuronz, Redfern Broadband Networks and ePredix to its list of portfolio companies. MTF realised its investment in Greengrocer.com.au and partially realised its investments in Openwave Systems and LookSmart. |
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Outlook |
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Success in previous years positions the newly formed Investment Banking Group well for the year ahead. The economic slowdown will probably reduce growth of the cross-border leasing business but have less impact on infrastructure and structured finance. The assets under management of Infrastructure and Specialised Funds and the leasing books of Macquarie Capital are expected to continue their rapid growth. |
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