Macquarie Group, Ltd. · ASX:MQG
Macquarie — Investor Presentation (February 2011)
79 slides from Macquarie's investor presentation, Feb 8, 2011
Slide 1: Operational Briefing
Macquarie Group Limited For personal use only Operational Briefing Presentation to Investors and Analysts 8 February 2011
Slide 2: Disclaimer
Disclaimer For personal use only Disclaimer The material in this presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (“Macquarie”) and is general background information about Macquarie’s activities current as at the date of this presentation. This information is given in sum
Slide 3: Agenda
Agenda For personal use only 10:05 – 10:10 Introduction – Richard Sheppard 10:10 – 10:30 Update since the Interim Result – Nicholas Moore 10:30 – 10:55 Fixed Income, Currencies and Commodities – Andrew Downe 10:55 – 11:15 Morning tea 11:15 – 11:40 Macquarie in the Americas – Tim Bishop 11:40 – 12:05
Slide 4: About Macquarie
About Macquarie Building for the medium term For personal use only Top-tier, global institutional securities house with strong Asia-Pacific foundations Full-service in Australia and Asia with growing offerings in the US, Canada, Europe and South Africa Macquarie Securities 9th largest research
Slide 5: Update since the Interim Result Announcement
For personal use only Update since the Interim Result Announcement Nicholas Moore Managing Director and Chief Executive Officer Macquarie Group Limited Operational Briefing 8 February 2011 – Presentation to Investors and Analysts
Slide 6: Overview
Overview For personal use only Market conditions continue to track back to more normal levels, with the exception of equity markets where volumes remain subdued Consistent with improved market conditions, Dec 10 qtr operating result for the Group was significantly up on the subdued Sep 10 and Ju
Slide 7: Overview
Overview For personal use only Organic growth initiatives continuing across the Group include: ― MSG: Consolidating the build out of cash equities and derivative businesses in Europe and US. Focus now on product rollout and developing client recognition ― MacCap: Focus on advisory services in our
Slide 8: Overview
Overview For personal use only Maintaining our strong market positions which will benefit from improving market conditions ― MSG: No.1 Australian equity research/advisory share for US and European institutional investors1, No.2 Australian overall research and sales for Australian institutional inv
Slide 9: More than 15,400 staff in over countries
More than 15,4001 staff in over 28 countries For personal use only EUROPE, MIDDLE EAST ASIA AMERICAS & AFRICA2 Staff: 1,566 Staff: 2,735 Staff: 3,693 AUSTRALIA Staff: 7,408 1. Staff numbers at 31 Dec 10. 2. Excludes staff in Macquarie First South joint venture and staff seconded to Macquarie Renaiss
Slide 10: Funded balance sheet remains strong
Funded balance sheet remains strong For personal use only Macquarie Group Limited $Ab 31 Mar 10 $Ab 30 Sep 10 $Ab 31 Dec 10 90 90 ST wholesale 90 issued paper (3%) ST wholesale issued paper (5%) 80 80 Other debt1 maturing in 80 Other debt1 maturing in the next 12 mths (8%) the next 12 mths (7%) ST w
Slide 11: Group capital surplus of $A3.2b
Group capital surplus of $A3.2b For personal use only Group capital of $A12.0b at 31 Dec 10, a $A3.2b buffer of capital in excess of the Group’s minimum regulatory capital requirements Strong Banking Group capital ratios – Tier 1: 10.6% (Core Tier 11: 9.8%); Total Capital: 12.2% Final form of
Slide 12: Outlook for 2H11
Outlook for 2H11 For personal use only At 1H11 Result Announcement, it was foreshadowed that subject to market conditions returning to more normal levels during 2H11, it was anticipated that FY11 result was to be broadly in line with FY10 Dec 10 qtr result reflected improved market conditions ac
Slide 13: Macquarie Group Limited Operational Briefing
For personal use only Macquarie Group Limited Operational Briefing 8 February 2011 – Presentation to Investors and Analysts
Slide 14: Fixed Income, Currencies and Commodities
For personal use only Fixed Income, Currencies and Commodities Andrew Downe Group Head Macquarie Group Limited Operational Briefing 8 February 2011 – Presentation to Investors and Analysts
Slide 15: FICC offers a broad range of products, services and clients
FICC offers a broad range of products, services and clients For personal use only Markets Products Capabilities Clients / Credit – high yield and / Exchange-traded futures / Market maker / Producers investment grade / Over-the-counter hedging / Liquidity providers / Consumers / Foreign exchange / Fi
Slide 16: FICC has consistently evolved
FICC has consistently evolved For personal use only Formation of Macquarie Energy power and gas trading and marketing Merged FX and debt divisions to form Fixed Interest & Currencies Environmental Product division Trading Commodity Investor Purchased Integrys Ag Structured Products Business Credit T
Slide 17: Positioning ourselves for growth
Positioning ourselves for growth For personal use only Continue to build upon a cycle-resilient portfolio of businesses – recent growth initiatives include: ― Establishment of FICC’s Asian regional hub in Singapore comprising new Asian Markets business (Asian rates, currencies and credit) ― Transf
Slide 18: Established regional hubs with full functionality and support
Established regional hubs with full functionality and support ~ 1,000 staff in 25 locations and in 14 countries globally For personal use only EMEA LONDON HUB Dec 09 headcount: 132 Dec 10 headcount: 166 ASIA ― Full complement of SINGAPORE HUB commodities offering, Dec 09 headcount: 6 including a
Slide 19: Regional growth initiatives
Regional growth initiatives For personal use only EMEA Asia Continued expansion of credit trading Continued development of FICC’s offering including major and emerging regional hub in Singapore markets Extension of agricultural OTC, energy Establishment of a presence in the OTC and physical oil
Slide 20: FICC focus on Asia
FICC focus on Asia For personal use only Focus on growth opportunities in Asia: FICC has well established businesses in Australia, the US and the UK To date FICC’s presence in Asia has centred around select physical and financial commodity plays: — Energy markets — Agriculture — Physical oil The
Slide 21: FICC Asia – select commodities offering
FICC Asia – select commodities offering For personal use only Agriculture Energy Markets Physical Oil Global reach, local expertise Global presence in energy Global strategy with an Asian OTC risk management and derivatives focus tailored customer solutions Cash-flow hedging solutions Te
Slide 22: Growing FICC's Asian presence rounds out Macquarie's platform in Asia
Growing FICC’s Asian presence rounds out Macquarie’s platform in Asia For personal use only MACQUARIE PLATFORM IN ASIA Equity Capital M&A Equity Markets Advisory CAPITAL RAISING Raising INSTITUTIONAL Asian corporates INVESTORS INTO Debt Capital Asian projects ASIA Bond Markets Raising Asian go
Slide 23: FICC Asian Markets' capabilities
FICC Asian Markets’ capabilities For personal use only Asian Markets is a risk and client focussed business across asset classes and countries South Korea Singapore Hong Kong South Korea China India China India Taiwan Hong Kong — Access to Asian rates, credit and Thailand currencies to pension funds
Slide 24: The Asian Markets capabilities
The Asian Markets capabilities For personal use only Offering access to Asian rates, credit and currencies to pension funds, hedge funds and other institutional investors interested in Asia Solution led approach providing active trading support to clients Foreign Exchange Interest Rates Credit
Slide 25: Asian Markets – product offering
Asian Markets – product offering For personal use only South Korea Credit China — Secondary trading in Asian India Taiwan investment grade bonds covering Hong Kong sovereigns, quasi-sovereigns, Thailand Philippines corporates and financial institutions Malaysia Singapore — Active price makers in sel
Slide 26: Macquarie's debt platform in Asia
Macquarie’s debt platform in Asia For personal use only Macquarie’s Equity Capital Markets offering has always been integral to our platform in Asia Macquarie’s debt capital markets and private syndicated loans offerings will add to the strength of the platform FICC Asian Markets enhances Macq
Slide 27: Summary
Summary For personal use only FICC has transitioned to a truly global platform ― Significantly completing our regional coverage ― Recruited an experienced Asian markets team and grown our Asian footprint ― Rounded the Macquarie Group Asian offering and complement FICC’s global offering 27
Slide 28: Macquarie Group Limited Operational Briefing
For personal use only Macquarie Group Limited Operational Briefing 8 February 2011 – Presentation to Investors and Analysts
Slide 29: Macquarie in the Americas
For personal use only Macquarie in the Americas Tim Bishop Country Head - US Macquarie Group Limited Operational Briefing 8 February 2011 – Presentation to Investors and Analysts
Slide 30: The changing face of Macquarie in the Americas
The changing face of Macquarie in the Americas For personal use only Expanding regional reach Metric 30 Sep 08 30 Sep 10 31 office locations across the US, Canada and Latin America Total 1,991 3,732 headcount % of global income 8% 27% contribution1 % of global 14% 24% headcount Offices across 19 31
Slide 31: Diversified group-wide capabilities
Diversified group-wide capabilities Income1 by Source - 6 months to 30 Sep 10 For personal use only The American businesses contributed 27% of Macquarie’s total income in 1H11 Macquarie Group worldwide Americas Institutional and retail 18% cash equities 13% Equity derivatives 24% 28% Funds managemen
Slide 32: Positioning for success in the Americas
Positioning for success in the Americas A hybrid approach For personal use only Bulge Bracket ‘Banks’ League table focus Predominantly focused on large cap corporates and financial sponsors Full product suite Leveraging Macquarie’s core strengths Macquarie opportunity Leading Asia-Pacific presence S
Slide 33: Bringing specialist expertise and a differentiated approach to target markets
Bringing specialist expertise and a differentiated approach to target markets For personal use only Institutional and Retail Cash Equities Debt Capital Markets and Fixed Income Equities underwriting and distribution capabilities Senior secured and unsecured debt underwriting Strong mid-market
Slide 34: Growing in the Americas: Funds management
Growing in the Americas Funds management For personal use only Pre-2007 2007 2008 2009 2010 2011 Funds management presence established in New York, Los Angeles and Toronto Infrastructure funds business launched in Canada followed by the US Hedge fund incubation commenced through establishment of JV
Slide 35: Growing in the Americas: Institutional and retail cash equities
Growing in the Americas Institutional and retail cash equities1 For personal use only Pre-2007 2007 2008 2009 2010 2011 Asian equities sales to US institutions Head of US Equities appointed Canadian equities and ECM platform established (Orion Securities) US ECM team established US PCM team establis
Slide 36: Growing in the Americas: Lending, leasing and fixed income
Growing in the Americas Lending, leasing and fixed income1 For personal use only Pre-2007 2007 2008 2009 2010 2011 Macquarie Air Finance established Leasing and asset financing for rail and manufacturing assets Emerging markets distribution Customised commodity lending Acquisition of leading indepen
Slide 37: Growing in the Americas: M&A and advisory
Growing in the Americas M&A and advisory For personal use only Pre-2007 2007 2008 2009 2010 2011 Generalist capabilities, concentrated in infrastructure, with a principal and fund advisory focus Specialist restructuring capability acquired (Giuliani Capital Advisors) Specialist Canadian resources ca
Slide 38: Growing in the Americas: Commodities, resources and foreign exchange
Growing in the Americas Commodities, resources and foreign exchange For personal use only Pre-2007 2007 2008 2009 2010 2011 Agricultural derivatives and structured finance; energy markets and derivatives Commodity investor products business; emerging markets distribution and origination platform Acq
Slide 39: Deep and comprehensive industry expertise, aligned group-wide
Deep and comprehensive industry expertise, aligned group-wide For personal use only Infrastructure, Resources Financial Sector Real Estate Utilities & Industrials TMET (Energy & Institutions Renewables Mining) No. of publishing 3 6 7 17 8 17 analysts No. of ECM deals1 33 21 5 21 2 107 No. of DCM dea
Slide 40: Selected transactions by sector
Selected transactions by sector Corporate Advisory CY10 For personal use only Infrastructure, Utilities & Resources Renewables Real Estate Industrials Financial Institutions TMET (Energy & Mining) Denver Fastracks General Growth Centerplate Cooper Gay Teranet Inc. InterOil Properties Eagle P3 Commut
Slide 41: Evidence of progress in the Americas
Evidence of progress in the Americas For personal use only More than 13 bookrun DCM deals and 53 M&A deals ~$US39b $US3b #4 in the Americas CY10, capital raised for in corporate lending North American 38 bookrun 8 involving publicly clients in the commitments in physical gas ECM deals in the US trad
Slide 42: Energy/Resources Case Study
Energy/Resources Case Study Building complementary group-wide capabilities For personal use only Group-wide: Group-wide Integrated team established to promote coordinated approach to energy sector M&A and advisory Financing Oil & gas and energy services Public and private equity capital expertis
Slide 43: Key challenges
Key challenges For personal use only Branding and positioning Macquarie brand and capabilities less well-known in the Americas Integrated approach Evolving from single-product focus to delivering a full range of products and services to clients across sectors in an integrated way Adaptation vs
Slide 44: Conclusion
Conclusion For personal use only The US is the biggest financial services market in the world - significant opportunity Unique positioning to capitalise on core strengths and the market opportunity Key hires and strategic acquisitions gaining momentum Continuing to build brand profile and en
Slide 45: Macquarie Group Limited Operational Briefing
For personal use only Macquarie Group Limited Operational Briefing 8 February 2011 – Presentation to Investors and Analysts
Slide 46: Macquarie Funds Group
For personal use only Macquarie Funds Group Shemara Wikramanayake Group Head Macquarie Group Limited Operational Briefing 8 February 2011 – Presentation to Investors and Analysts
Slide 47: Macquarie Funds Group at a glance
Macquarie Funds Group at a glance For personal use only Macquarie Funds Group is now positioned as the largest Australian based asset manager and a top 40 asset manager globally ~$A300b 21 ~1,500 ~20-25% AUM1 Countries worldwide1 Staff1 Contribution to Macquarie2 Macquarie Infrastructure Macquarie I
Slide 48: Global presence
Global presence For personal use only Macquarie Funds Group has ~1,500 staff across 21 countries EUROPE, MIDDLE EAST AMERICAS ASIA AND AFRICA Staff: ~160 Staff: ~680 Staff: ~110 Countries: 9 Countries: 3 Countries: 7 AUSTRALIA AND NEW ZEALAND Staff: ~520 Countries: 2 1. All numbers as at 31 Dec 10.
Slide 49: Competitive advantage: Income diversity
Competitive advantage Income diversity For personal use only Macquarie Funds Group’s income sources are diversified across regions and asset classes Income diversity by geography1 Income diversity by asset class1 Other real assets, 17% Fixed income, EMEA, 20% 27% North American real assets, 9% North
Slide 50: Competitive advantage: Culture
Competitive advantage Culture For personal use only The best of an The best of a institutional environment boutique environment Alpha-generating teams structured World class operational support like autonomous boutiques Strong risk management Entrepreneurial environment Global distribution effort co
Slide 51: 2010 was a transformational year
2010 was a transformational year For personal use only Acquired Delaware Investments in Jan 10, tripling Macquarie Investment Management’s AUM and earnings and delivering a strong US presence Consolidation with Macquarie Infrastructure and Real Assets in Oct 10 created a single global asset mana
Slide 52: Rationale for consolidation
Rationale for consolidation For personal use only Consolidation of asset management businesses within Macquarie Funds Group provides a range of benefits ― Product offering of combined business highly complementary Product suite ― Ability to deliver broader insights to investors from involvement acro
Slide 53: Macquarie Infrastructure and Real Assets: Overview
Macquarie Infrastructure and Real Assets Overview For personal use only Macquarie Infrastructure and Real Assets continues to be recognised as a leading global alternative asset manager specialising in: ― Infrastructure and real estate funds ― Customised accounts Established in 1996, Macquarie I
Slide 54: Macquarie Infrastructure and Real Assets: Global presence
Macquarie Infrastructure and Real Assets Global presence For personal use only Japan ~100 portfolio businesses and ~120 properties Hanjin Pacific Corporation South Korea UK Spain Czech Republic Canada USA West Sea Power / West Sea Water Bristol Airport Asset Energia Solar Ceske Radiokomuni
Slide 55: Macquarie Infrastructure and Real Assets: Recent initiatives
Macquarie Infrastructure and Real Assets Recent initiatives For personal use only Investor engagement model adopted as part of integration into Macquarie Funds Raising Group is resonating well with investors capital $A2.0b of new commitments since 1 Oct 10 Announced first close of new Korean f
Slide 56: Macquarie Investment Management: Overview
Macquarie Investment Management Overview For personal use only Macquarie Investment Management offers investment management across a number of sectors including: ― Listed equities ― Fixed income ― Currencies ― Listed infrastructure ― Funds of private equity funds ― Insurance asset management Mac
Slide 57: Delaware Investments update
Macquarie Investment Management Delaware Investments update For personal use only Delaware acquired by Macquarie Funds Group in Jan 10 ― On acquisition close, Delaware had $US135b of AUM and ~500 staff Delaware now part of Macquarie Investment Management business ― No voluntary senior personnel
Slide 58: Macquarie Investment Management: Recent initiatives
Macquarie Investment Management Recent initiatives For personal use only Several new strategies launched during the quarter, including Global Income Opportunities (which utilises Delaware and Macquarie-heritage fixed income investment capabilities) and Asian Infrastructure Securities Production
Slide 59: Macquarie Specialised Investment Solutions: Overview and recent initiatives
Macquarie Specialised Investment Solutions Overview and recent initiatives For personal use only Macquarie Specialised Investment Solutions manufactures and distributes a range of fund and equity based structured products including: ― Capital protected investments and associated lending arrangemen
Slide 60: Benefits of asset management business to Macquarie
Benefits of asset management business to Macquarie For personal use only Annuity Annuity income stream provides diversification income Service Client service based, rather than being a capital intensive based business Global growth in savings underpins strong fundamentals for Growth asset mana
Slide 61: Macquarie Funds Group is well positioned to benefit from improving market conditions
Macquarie Funds Group is well positioned to benefit from improving market conditions For personal use only Focus is on organic growth of our asset base and driving operating and cost synergies across our businesses Diverse range of products and strong relative investment performance expected to
Slide 62: Macquarie Group Limited Operational Briefing
For personal use only Macquarie Group Limited Operational Briefing 8 February 2011 – Presentation to Investors and Analysts
Slide 63: Risk Management at Macquarie
For personal use only Risk Management at Macquarie Stephen Allen Group Head Macquarie Group Limited Operational Briefing 8 February 2011 – Presentation to Investors and Analysts
Slide 64: No change in risk management principles
No change in risk management principles For personal use only Macquarie’s risk management principles have remained largely stable over 30 years and served the Group well over the past few years The key aspects of Macquarie’s risk management approach are: Ownership of risk at the business Underst
Slide 65: No change in risk management principles
No change in risk management principles For personal use only Risk Management Group (RMG) is responsible for assessing and monitoring risks across Macquarie RMG’s oversight of risk is based on five key principles: – RMG is independent of the operating areas of Macquarie – Head of RMG, as Macquarie
Slide 66: Macquarie stress tests generally exceeded the observed market volatility
Macquarie stress tests generally exceeded the observed market volatility For personal use only Foreign Exchange - AUD/JPY Equities - Hang Seng Index 20 30 Macquarie stress test ▼ Macquarie stress test ▼ 15 20 10 10 Daily % change Daily % change 5 0 0 -10 -5 -20 -10 -30 -15 -40 Macquarie stress test
Slide 67: Some enhancements in response to the changing environment
Some enhancements in response to the changing environment For personal use only Few adjustments to limit framework: approach has always been concentrated on the tail events, not on statistical models Main changes as follows: — Dec 07: Replacement of ‘Equity Market Driver’ Macro-Economic Linkages
Slide 68: Some enhancements in response to the changing environment
Some enhancements in response to the changing environment For personal use only While the principles around risk management have remained stable over the years, our approach evolves in response to changing business needs Examples include: 9 Staffing: Increasing RMG staff numbers in relevant offices
Slide 69: Total RMG headcount has grown in-line with business expansion
Total RMG headcount has grown in-line with business expansion For personal use only As at 31 Dec 10, there were 396 RMG staff globally1, up from 359 in 31 Mar 10 ― In addition to RMG staff, there are over 450 divisional risk staff throughout the globe 450 5.00 400 4.50 350 4.00 3.50 300 % RMG vs M
Slide 70: RMG staff location aligned with geographic distribution of businesses
RMG staff location aligned with geographic distribution of businesses For personal use only Significant growth in the number of staff located outside of Australia EUROPE, MIDDLE EAST ASIA AMERICAS & AFRICA Staff in 2005: 12 Staff in 2005: 10 Staff in 2005: 9 Staff in 2010: 70 Staff in 2010: 38 Staff
Slide 71: RMG is experienced at applying risk management principles to changing business mix
RMG is experienced at applying risk management principles to changing business mix For personal use only Macquarie’s mix of businesses have always evolved and changed — 40% of income comes from businesses that didn’t exist 5 years ago1 — Macquarie has a track record of integrating businesses inclu
Slide 72: Successful integration of acquisitions
Successful integration of acquisitions For personal use only Acquiring Business Strategic rationale Key transitional tasks Business Blackmont Capital Banking and Grow wealth management business in Role of RMG Canadian wealth Financial Services Canada RMG are a key stakeholder in integration manag
Slide 73: Expanding regulatory footprint
Expanding regulatory footprint For personal use only Business expansion around the globe creates new regulatory obligations — e.g. FICC Asian Markets will utilise the Singapore branch of Macquarie Bank Limited Risk Management Group is experienced in managing regulatory relationships with over 10
Slide 74: Basel III and other regulatory changes
Basel III and other regulatory changes For personal use only Basel Committee on Banking Supervision released final text of the Basel III framework in Dec 10 covering: — Revised capital rules — A new liquidity framework Final text largely consistent with the press releases on 26 Jul and 26 Sep 10
Slide 75: Basel III and other regulatory changes
Basel III and other regulatory changes For personal use only Some uncertainties remain — Basel is currently undertaking a quantitative impact study (QIS) of changes to credit valuation adjustment (CVA) methodology and the capital requirements for bank exposures to central counterparties – final me
Slide 76: The risk management framework is well placed to support our business activity going forward
The risk management framework is well placed to support our business activity going forward For personal use only Our risk management principles will remain constant but we will continue to evolve their application Significant level of change in the finance industry, resulting in a more complex
Slide 77: Macquarie Group Limited Operational Briefing
For personal use only Macquarie Group Limited Operational Briefing 8 February 2011 – Presentation to Investors and Analysts
Slide 78: Glossary
Glossary For personal use only ~ Approximately DRP Dividend Reinvestment Program $A Australian Dollar DTA Deferred Tax Asset $C Canadian Dollar ECM Equity Capital Markets $US United States Dollar EMEA Europe, the Middle East and Africa 1H11 Half Year ended 30 September 2010 Ex Excluding 2H11 Half Ye
Slide 79: Glossary
Glossary For personal use only LNG Liquefied Natural Gas pcp Prior Corresponding Period m Millions PMI Preferred Membership Interests M&A Mergers and Acquisitions qtr Quarter MacCap Macquarie Capital Group QIS Quantitative Impact Study Mar 10 qtr Quarter ended 31 March 2010 RBA Reserve Bank of Austr
Macquarie Group — Investor Presentation (February 2011) on 6ix