Macquarie Bank to acquire the London bus business of Stagecoach Group plc

23 June 2006

Macquarie Bank today announced that it had entered into an agreement to acquire 100% of Stagecoach London, the London bus transport business of Stagecoach Group plc (“Stagecoach”), for a total consideration of £263.6 million (A$658.7 million)^1.

Stagecoach London, one of the top five operators in the London bus market, owns and leases approximately 1,300 vehicles and employs around 4,300 staff through its London bus operations.  Stagecoach London owns 10 depots located in the East of London and provides bus services in the regulated London bus market through its portfolio of over 80 route concessions from the local government body, Transport for London (“TfL”).  The routes operated serve an average of 300 million passenger journeys each year.   The business being acquired has a strong and experienced management team with extensive experience in the transport and bus industries.

Commenting on the transaction, Macquarie Bank Chief Financial Officer, Greg Ward said, “The Stagecoach London bus operation is an excellent opportunity to acquire a business that provides an essential community service in a regulated market.  Its network of depots creates a unique franchise within its region, and the business benefits from strong cashflow visibility through contracted bus route concessions.“

“In light of London’s growing population and increasing demands on public transport , bus travel provides an appealing and accessible alternative for commuters.  The Stagecoach London bus business has a solid reputation, with capable management and high levels of customer service,” Mr Ward said.

Key characteristics of the business include:

• an essential service with a growing demand profile;
• a network of depots creating a strong market position within the competitive market in London;
• fixed-period bus route concessions from TfL, during which the business is insulated from passenger volume risk; and
• a well funded pension scheme for employees.

The London bus business’ management team will remain with the business to ensure a smooth transfer of ownership and continue successful management of the operations.  The business is also sufficiently capitalised to ensure that it can benefit from future growth opportunities.

Macquarie Bank will subscribe for £72.0 million (A$179.6 million)¹ of equity, with the remainder being debt funded.  The impact on Macquarie's Tier 1 capital ratio during the holding period is expected to be a reduction of approximately 0.7%.

Macquarie Bank will explore a range of options for its stake, including potential inclusion in a Macquarie-managed fund within the next six to 12 months.

Financial close of the acquisition is expected to occur during the third quarter of 2006.

For further information please contact:

Karen Smith
Corporate Communications
Macquarie Group (London)
Tel: (44) (0)20 7065 2420
Mobile: (44) (0)79 1708 1541

¹ £1.000:A$2.494 Bloomberg exchange rate as of 22^nd June 2006