The International Expansion Of Macquarie Bank

Macquarie Bank (now Macquarie Group) has risen from a small, Australian subsidiary of a UK investment bank to become one of the world’s most prominent banks. It is particularly prominent in the field of infrastructure where an innovative, specialist approach to investing and structuring has given it a platform to grow assets and revenues and secure early market share in an infrastructure privatisation renaissance.

Macquarie Group successful international expansion began with the accumulation of specialist skills in “real asset” management and investing. This is primarily due to its location in Australia where it benefited from two simultaneous and important developments: the willingness of governments to seek more creative forms of infrastructure finance coincided with the expansion of superannuation funds and their capacity to invest in these projects.

Superannuation funds in Australia recognised early that their aim to provide long-term, stable income for retirement could be facilitated by investing in infrastructure, which can provide a good liability match. In Australia, industry funds are the fastest growing sector of the pension market, and this is where the most interest in infrastructure assets can be seen (Deloitte, 2007). One major Australian consultant to industry funds has a typically very high allocation (approximately 5 to 8%) within balanced portfolios (Baltazar, 2008). In the mid-1990’s the Australian Federal Government changed the landscape for retirement savings in the country by legislating compulsory retirement savings schemes, or superannuation. Superannuation funds have long had allocations to real assets such as real estate and infrastructure creating steady demand for expertise in this area (Oliver, 2006). Australia’s massive privatisation programme during this time, particularly tollroad privatisations, followed on the coat tails of other nations. Recent private infrastructure investing actually has its origins in Europe and is now enjoying a renaissance in terms of private ownership that really began with Margaret Thatcher's Government during the early 1980's through the introduction of Public/Private Partnerships. Later in her tenure, Prime Minister Thatcher privatised many UK utilities. Moreover 200 years ago most infrastructure in the US and UK was privately owned. Where Australia, and Macquarie Group, has led the way has been the mass privatisation of user-pays infrastructure, which has not only included regulated utilities but also, transport or patronage infrastructure, including tollroads and airports. These are the types of assets and models that Macquarie has been able to market so successfully here and overseas (Lazard Asset Management, 2005).