chapter 6

1 Americas 48 per cent, EMEA 20 per cent, Asia 7 per cent, Australia 25 per cent. In the 2023 half-year results to 30 September 2022, released in October, by which time this book was already at layout stage, the figures had changed. The Americas now constituted 38 per cent of international income, EMEA 24 per cent, Asia 10 per cent and Australia 28 per cent. 

2 In 2006: Asia-Pacific was 41 per cent of international income, followed by Europe, Africa and the Middle East at 34 per cent and the Americas at 25 per cent. 

3 55 per cent international, 45 per cent Australia. 

4 A wholly owned subsidiary, HAS Overseas Limited, was incorporated in the 1974 financial year, conducting several transactions in New Zealand. 

5 54,000 in the Americas, 83,000 in EMEA and 75,000 in Asia. This compares to the total staff of Macquarie itself, including its operationally segregated subsidiaries, of 18,133 as of 31 March 2022. 

6 This venture, which involved Macquarie acquiring 30 per cent of AMMB’s funds management business and also incorporated a financial markets business, was launched in 1996, which was unfortunate, since the Asian financial crisis came the following year. Malaysia adopted extremely strict and controversial capital controls in response, pretty much killing the new business. 

7 In 2011. 

8 Raising US$22 billion, US$4 billion and US$1.3 billion respectively. 

9 The 2010 report, which has a special section devoted to Asia, says that ‘over 65 per cent of our operating income comes from the Asia Pacific region’, a definition which lasts about a year (the 2011 report refers to Macquarie as ‘an Asia-Pacific specialist’) but then never really appears again. At that stage Macquarie had 9700 staff in 26 Asia-Pacific locations.

10 Earlier, it had a curious gold-smelting business but that had come and gone by now.

11 In early days Macquarie would often expand into new markets through joint ventures. AMMB was an example in Malaysia, and Old Mutual in South Africa. Infrastructure partnerships would include State Bank of India and, in China, Everbright. 

12 Naghdy was an important figure in Macquarie’s international expansion, moving to Korea in 2000 and serving as a founding member of the team that established Macquarie’s first infrastructure funds management business in Asia. Among other roles, he was also a key figure for Macquarie in the Middle East, out of an Abu Dhabi office, until the global financial crisis. He rose to be head of Macquarie Capital in Asia and the Middle East, developing much of the renewable energy business there. He is now one of the many Macquarie alumni at Stonepeak, where he is Head of Asia and the Middle East.

13 ‘And we had no other competition at the time,’ says Kim. ‘There was KDB [Korean Development Bank, a policy lender] and KB [Kookmin] on the debt financing side. But we were almost the only bank with the capacity to invest in equity.’

14 For a whole lot more on Equis, read this, by one of the authors of this book: https://www.euromoney.com/article/b1hh2f9z111yy0/private-equity-the-inside-story-of-equis-and-its-partners-800-million-bounty

15 ‘KRIF is a clear example of the success of the Bank’s infrastructure and specialised funds in global markets,’ the report said. KRIF was ‘widely considered to be the most active private infrastructure player in the Korean market . . . Has also created a platform for Macquarie to leverage its global experience in project finance, pioneering the use of non-recourse funding in the Korean market.’

16 This is a different deal to the 2004 purchase of ING’s broader Asia brokerage operations in 2004.

17 http://www.koreaherald.com/view.php?ud=20150128001297

18 Head of Client Solutions Group Asia-Pacific, Macquarie Asset Management.

19 https://www.euromoney.com/article/b12kl286tny631/south-korea-macquarie-mans-highway-dreams

20 As elsewhere in the world, there is an evolution in what is considered infrastructure. ‘We are expanding into infra-like, infra-adjacent, or core private equity,’ says Kim. ‘So Korea is pioneering new product from Macquarie’s point of view: we can probably launch a Core PE product outside Korea, globally.’ Increasingly, it is also going head to head with the private equity players who have a powerful presence in Korea, both local and international.

21 Macquarie started investing in waste to energy companies in Korea in 2013, way ahead of the field. ‘Back then nobody considered waste to energy as an investable sector,’ says Kim. By 2018 everyone else piled in, valuations went up to multiples of fifteen to twenty times and Macquarie set about exiting them all again. 

GIG is developing floating offshore wind projects in Korea’s Ulsan and South Jeolla Province, and is on board with the government’s New Deal plan which promises green energy. Today joint ventures are not with local banks but industry players like TotalEnergies, with whom they are delivering an initial 2.3 GW of offshore wind projects. 

Deals like this anchor continuations of Macquarie’s earliest funds. The MKOF series is now up to five, its most recent investments being into IT service companies, hydrogen manufacturers and distributors, and facility management companies servicing the LG Group. The most interesting deal of recent times bought ADT Caps, a security services group, as a co-owner with SK Group, one of the most powerful chaebol in Korea, in 2018. ‘That was a breakthrough in going outside infrastructure,’ says Kim.

22 Roberts has been head of Macquarie Europe, joint head of Macquarie Capital Advisers, global head of Macquarie Infrastructure and Real Assets, and executive chairman of the Macquarie Funds Group.

23 Miller would go on to become head of infrastructure at Macquarie Capital Australia and served 21 years at the bank before leaving in 2015. He later joined JPMorgan.

24 Other young bankers Macquarie dispatched to Toronto for the bid included Frank Kwok, Warren McNabb, Kirsten Hannan and David Beck.

25 108 kilometres long in the section covered by the concession.

26 Leo de Bever would go on to be CIO at Victorian Funds Management Corporation in Melbourne before running Alberta’s public sector pension plans and oil and gas sovereign wealth fund, Alberta Investment Management Corporation, or AIMCo.

27 Nobrega went to considerable effort to verify this number for us, going back to OMERS and reading minutes of the board meetings leading up to the bid, but the actual bid documents were shredded after the transaction closed in accordance with a confidentiality agreement among consortium participants. The minutes do identify, though, that there were ten participants in the consortium, which were listed in order of importance for the bid: Omers (equity), Bank of Nova Scotia (debt), Macquarie (professional experience and skills plus some equity), then the contractor group led by Dragados, an international contractor headquartered in Madrid. The BC Pension Plan, as it was then called, appears further down, though its contribution may have elevated during the process.

28 She didn’t. Kirsten Hannan, the woman in question, is now a Division Director in the Green Investment Group.

29 Moore recalls this as part of ‘a presentation I gave dealing with the trial and error/evolution path of science, nature and our own business.’ 

30 In fact, any conversation with people in Toronto tends to show a rather ambivalent relationship to the 407 and what it represents. Paid toll roads remain unusual in Ontario and Torontonians object to many things about the road, from the military technology that scans their licence plates to the fact that if you don’t pay your 407 tolls you can’t renew your licence. 

31 Salisbury remembers paying C$500 million for a stake CDPQ had paid C$125 million for in the original bid. 

32 Mark Ramsey, who had already started the global infrastructure asset management business in Australia, did some early work on developing this business in the London office. He went on to become the head of Latin America for Macquarie Capital.

33 Specifically, a 24.8 per cent stake in Lusoponte Concessionaria para a Travessia do Tejo, or Lusoponte, which held the concession for two bridges over the Tagus River, the Vasco da Gama Bridge and the Ponte 25 de Abril. Kvaerner also owned 50 per cent of Dundee Energy Plant in Scotland, 50 per cent of the Queen Elizabeth Hospital which was under construction in London, 26.7 per cent of the Ministry of Defence headquarters building in London, a service agreement on the Dartford River Crossings near London, and 50 per cent of Yorkshire Link, an operational shadow toll road.

34 Italy’s Autostrada also owned part of this concession, which Macquarie then bought out. 

35 £7.20 when the author visited in 2022, but about £4 during Macquarie’s ownership.

36 https://www.afr.com/politics/macquarie-takes-to-toll-roads-20010905-j85my

37 https://www.globalcapital.com/article/28mwzhwm7trp9moinl2ps/australias-mig-shines-in-dark-equity-markets. This record deal was completed just days before the 9/11 attacks.

38 MIG would go on to become a top 30 ASX company for a time.

39 MEIF 7 was fundraising at the time of writing. https://irei.com/news/macquarie-launches-seventh-european-infrastructure-fund/ 

40 The initial focus was concentrated on the deregulation process under way for Ontario’s electricity distribution sector, where Warren McNabb had experience from New Zealand. Jim Miller focused on this area and Salisbury focused on the big pension funds and the effort to buy in to the 407.

41 McNabb had been advising the Alberta government on electricity assignments so knew the sector well.

42 Aside from AltaLink, Teachers’ came in for a total of at least A$450 million in MIG, A$200 million of it in the jumbo financing to buy out CDPQ’s stake in the 407, and a further A$250 million in on-market purchases. When Macquarie Airport Group needed funds, Ontario Teachers’ would step in for €75 million as a cornerstone investor in a faltering equity raise. When the Macquarie Communications Infrastructure Group (MCIG) fund was launched, another A$20 million. In the years ahead, Ontario Teachers’ would take part in deals involving Sydney Airport, the M7, the Express Pipeline in Canada and Transurban, while also making crucial introductions to other instos around the world.

43 Canada Pension Plan Investment Board, or CPP Investments, established on New Year’s Eve 1997 in Toronto to invest the funds of the Canada Pension Plan, a contributory social insurance program that is a key part of Canada’s public retirement income system.

44 Osorio says this was the first fund established outside of Australia, and a test for the Macquarie model on an international level.

45 AltaLink, MEAP and MAG.

46 ABP came into MEIF I as the equal-largest investor, €200 million, and subsequently put billions of euros into Macquarie deals and funds around the world.

47 Two and twenty refers to a fee structure made popular by hedge funds and private equity firms. It means a 2 per cent fee, plus 20 per cent of profits or returns above an agreed hurdle.

48 Leo de Bever had gained board approval for C$150 million investment, making it the cornerstone investor, and had even given a presentation to other investors at Macquarie roadshows for the fund. The withdrawal from MEAP was therefore significant.

49 CPPIB then made a €200 million commitment to MEIF I around the same time. ‘This is a great example of the importance of relationships and introductions within the Canadian super fund space,’ Salisbury says.

50 ‘If motorists do not complain about it [the toll] being too high, then we will not have done our job,’ he was reported as saying. This drew a swift admonition from Steve Allen, by now MIG’s CEO: ‘I totally reject the views attributed to Eager and advise he has no ongoing role with MIG or the Macquarie Group.’ Ouch.

51 James Cowan is the most senior figure in the Macquarie Toronto office today. Macquarie also had a Canadian mortgage business, and for a time there was talk of applying for a banking licence; it acquired a business called Blackmore in Canada in the aftermath of the global financial crisis. But the business was considered non-core and Greg Ward exited it after taking over the Banking and Financial Services group. 

52 A US$100 billion private markets specialist where Warn-Schindel manages infrastructure and real assets.