Nearly A$1.5 billion (€825 million; $1.1 billion) in write downs of equity investments continued to sour Macquarie Group’s earnings as the world’s largest private manager of infrastructure assets posted a 52 percent decrease in profit to A$871 million for its 2009 fiscal year.
The firm also executed an A$540 million private placement of shares in Australia, despite an announcement in February that it had no plans to raise capital in the near term to stem write-downs from its investments in listed funds it manages.
Many of them have been trading below their net asset values, contributing to A$417 million of write-downs Macquarie recognized across its managed funds. The biggest write-downs came from Macquarie Infrastructure Group (A$153 million), Macquarie Communications Infrastructure Group (A$113 million) and Macquarie Media Group (A$93 million).
Unrealised losses for all 14 of its listed funds currently top A$1.15 billion, indicating that the firm may make further write-downs in the future on these investments.
Total write-downs across all assets topped A$2.5 billion, about A$500 million more than the A$2 billion in full-year 2009 write-downs Macquarie had forecast in its half-year and full year guidance.
Macquarie Group chief executive officer said Nicholas Moore said in a statement that the firm remains “well capitalised and funded”, with A$10.2 billion in reserves – $3.1 billion more than required by regulators. The firm has avidly taken advantage of a guarantee for deposits and wholesale funding announced by the Australian government last year as a way to strengthen its balance sheet.
Looking into 2010, Macquarie management said they plan to focus on growing unlisted funds under management. They are in the process of creating an unlisted infrastructure fund in Mexico and another fund for Russia, according to the presentation.
Despite this, Macquarie’s dry powder for investments from unlisted funds declined over the last year. The funds management group within Macquarie Capital, Macquarie’s investment banking division, now has about A$6 billion in unlisted funds available for investment, versus A$9 billion a year earlier, according to the presentation.
The decline came amid A$7.6 billion Macquarie Capital raised for its managed funds and consortia over the last year.
Macquarie staff numbers continued to decline. The firm counted approximately 12,700 staff worldwide, versus 13,898 at 30 September 2008.