Macquarie continues European expansion

17 May 2005

The European operation of the Macquarie Bank Group (Macquarie) has seen substantial growth in income and fund assets over the past five years. Macquarie says its early successes in Europe laid the foundation for its recent surge in acquisitions and business growth.

Macquarie's European income has increased to €257 million ($A430 million) in the year to 31 March from a modest base of €8 million ($A14 million) just five years ago. European income now represents 34% of Macquarie's international revenue. In the past five years, European specialist fund assets have grown from almost nothing to a portfolio of €6.6 billion ($A11.1 billion).

Head of Macquarie Europe, Jim Craig, says the recent growth for Macquarie in Europe is the result of building upon early success and a growing reputation for sound judgement and a 'safe pair of hands'.

"Macquarie's recent growth in Europe is the result of years of ground work and success starting to build upon success," says Mr Craig.  "From our first European activities in equities and project finance we have built new businesses and extended the franchise of other Macquarie businesses."

Infrastructure investment and management
From a portfolio which started with roads acquired from Kvaerner and the acquisition of Bristol Airport, Macquarie's 16* European infrastructure assets now include airport stakes in Brussels, Rome, Bristol and Birmingham, the M6 Toll - the UK's first toll road -, the Tagus Crossings in Portugal, the Arlanda Express in Sweden, ntl:Broadcast; UK utilities South East Water and the Wales & West** gas distribution network and a leading position in the UK renewable energy sector through Novera Macquarie Renewable Energy and Energy Power Resources. Nine of these 16* assets have been won in the past 18 months.

Mr Craig says the success of foundation assets such as the M6 Toll road in the UK and Bristol Airport has underpinned the growth now emerging with landmark acquisitions such as Brussels Airport, Wales & West** and ntl:Broadcast.

"We can now point to a track- record of sound judgement and responsible and profitable asset management which is attractive to and beneficial for investors, government partners, clients and the communities the assets serve," says Mr Craig.

Macquarie is also establishing strong relationships with European investors. The Macquarie European Infrastructure Fund was launched in April 2004 as the first pan-European dedicated infrastructure fund. Strongly supported by major pension fund and institutional investors, the Fund now has investor commitments in excess of €1 billion, ahead of its final close at the end of June 2005.

"Investors are attracted to the Macquarie model in which industry experts are instrumental in sourcing, winning and managing the assets. And to date these investors are also pleased with the performance of the five assets the fund has committed to since it launched," says Mr Craig.

Extending the scope
Mr Craig says the recently announced acquisition of the leading European directories business YBR Group, by European Directors SA, a consortium led by the recently listed Macquarie Capital Alliance Group, is an exciting development.

"YBR Group has significant potential with characteristics similar to that of infrastructure due to its broad community usage and high barriers to entry. It is an exciting addition to our portfolio."

Breadth of activity
Other areas of Macquarie's European operations are also experiencing success and growth. The European Resources Corporate Advisory team has taken on its first public market takeover advisory role as adviser to Lundin Mining on its merger offer for Arcon International Resources. Macquarie also boasts one of Europe's leading private sector PFI advisory businesses.

The European-based Energy Markets Division is now a well established, and is in the process of establishing a UK Gas services business with a physical natural gas trading desk to pursue physical and financial gas trading opportunities.

The Division has been granted a license to ship physical gas. This quasi financial market is a good adjunct to the existing financial energy trading and offers strong synergies allowing Macquarie to better meet the needs of both consumers and producers.

The London-based Treasury and Commodities operation is growing strongly and has recently signed a financial products joint venture with the Abu Dhabi Commercial Bank to bring the benefits of Macquarie's treasury and commodities products and expertise to ADCB's extensive banking franchise throughout the Gulf Community Countries.

Macquarie Global Property Advisers - a 50:50 joint venture between Macquarie and management which focusses on private equity investment in real estate Europe and Asia - was established in 2004. The Group advises Lend Lease Global Properties SICAF which is fully invested in a diverse range of properties across Europe and Asia.

Macquarie Capital Partners - which specialises in raising private equity for real estate operating companies and funds - closed 10 transactions totalling US$ 2.1 billion in Europe in the year to March 31 2005, including a pan-European multi-investor fund, joint ventures and M&A advisory assignments.

"Macquarie's European operations have reached a critical and exciting phase of development," said Mr Craig."We are well positioned to continue building on this success across our business."

*Includes 2 assets subject to closing arrangements
**Subject to customary closing arrangements

For further information, please contact:

Karen Smith
Corporate Communications Manager
Macquarie Bank
Tel: (44) (0) 20 7065 2420