Macquarie spins out private equity unit

Michael Lukin and two partners will buy out the firm’s $5bn private markets operations and launch ROC Capital.

Australia's Macquarie Group is selling its global private equity division to three Macquarie executives who will depart the firm, a source close to the matter confirmed to Private Equity International.  

Its Macquarie Investment Management Private Markets division, which has about $5 billion in assets under management, will spin out along with the current management team consisting of Michael Lukin, Andrew Savage and Shaw Ng under the name ROC Capital Partners.

Macquarie declined to comment.

The deal is not yet complete, but local media said the groups have reached a price after “months of negotiations”.

“The business has done a review of the private markets offering over a long time, months and months, to see what is the best model for clients and investors effectively, and if you look at the players in the [private equity] space it tends to be independents and boutiques,” PEI’s source said.

While banks have been spinning out their captive private equity units over recent years due to new regulatory constraints imposed post-financial crisis, Macquarie’s motivations are not regulation-driven.

The firm is letting go of the unit due to the increasing move toward direct investment and away from a fund of funds model, something better executed by an independent GP.

“[ROC] will be better placed to invest directly in companies,” PEI’s source explained, adding that from an investment committee perspective, quickly getting deals done can be difficult within such a large institution.

“As much as Macquarie prides itself on being agile, the reality is the smaller you are and if you only have one core business or area of focus then you can completely align yourself to that area of focus whereas if you have a diversified offering, there are pros of doing that but there are things you have to give up.”

“Macquarie is listed as well, on the ASX, so is also bound by disclosure requirements and a whole series of regulations,” the source added.