The evolution of a global energy business
7 February 2015
When Macquarie entered the bullion trading market in 1978, it laid the improbable foundations for a global energy business.
In the ensuing years, the organisation developed its offering across international metals and agricultural commodities markets and, in 2003, used this knowledge to establish an energy trading business in London, providing financial risk management products across the energy markets asset class.
“We had always been interested in energy markets but we waited for the right time to enter,” says Nicholas O’Kane, who heads Macquarie’s Energy Markets Division.
“A lot of the merchants that had expanded into the UK and Europe had retreated and we felt that, given the size of our balance sheet and our expansive history in commodities, this was the right time to move in.”
Energy has evolved into a core specialty for Macquarie across many facets of its business.
On any given day, Macquarie supplies customers with almost 10 billion cubic feet of natural gas globally, trades energy products and carbon emissions, manages power stations and renewable energy assets, helps households monitor their power consumption and assists energy companies with their growth and risk management strategies.
The growth of Macquarie’s energy activities across so many areas reflects the way the organisation has grown and diversified by focusing on new opportunities, progressively building capabilities and expanding into adjacent areas of expertise.
The acquisition of energy marketing and trading company Cook Inlet Energy Supply in 2005 enabled Macquarie’s first physical natural gas trade in the US. In 2009, Macquarie acquired Constellation Energy’s downstream natural gas trading operations, significantly boosting its physical gas presence.
Today, Platts ranks Macquarie as the third largest trader of natural gas in North America. In addition, Macquarie actively trades physical oil, power, coal and refined products and has extensive capabilities in emissions markets.
As Macquarie established its energy markets business, it was also developing a number of funds to invest in infrastructure assets around the world.
A global leader in infrastructure asset management, Macquarie-managed funds have invested in and managed more than 30 energy-related assets in 12 countries.
In the UK, Macquarie has a significant role to play in moves by the UK Government to reduce carbon emissions by rolling out gas and electricity smart meters to 53 million homes and small businesses.
With a portfolio of more than seven million electricity meters in the UK, including the largest portfolio of smart meters, Macquarie is working closely with energy suppliers as the rollout progresses.
Macquarie is also assisting companies seeking to capitalise on the US shale oil boom, which is transforming the global energy sector.
Over the past four years, Macquarie has advised Freeport LNG on reconfiguring its Texas terminal facilities, originally intended to receive imports, to process two billion cubic feet of shale gas a day for both domestic consumption and international export.
Macquarie has more than 60 advisory executives dedicated specifically to the energy sector. They have advised on 178 energy mergers, acquisitions and divestitures worth more than $US50 billion since 2004.
In addition, Macquarie has raised more than $US40 billion of equity for energy clients in the past five years, while its research team analyses more than 250 energy sector stocks globally.
The organisation continues to evolve its energy capabilities in areas including renewable energy, so it can continue to meet client expectations in a changing landscape.