Seed of doubt for Macquarie asset disposals

Recent volatility in global equity markets has caused a slow-down in Macquarie Bank’s disposal of seed assets into specialist funds, according to the company’s leading executive.

Speaking at the company’s annual general meeting, Macquarie Bank (Macquarie) chief executive officer Allan Moss said in the last quarter market concerns over oil prices, inflation, interest rates and political turmoil had dampened demand for the assets.

“Listed markets have been volatile over the last couple of months,” he said.

“As a result, the demand for IPOs [initial public offerings] has been patchy, and for this reason disposals are likely to be slower than anticipated.”

Despite the volatility, Moss stood by the bank’s strategy of using “privileged” seed assets, such as US car park company Icon Parking, as the foundation for its specialist fund business.

While he acknowledged performance fees were “well down”, Moss highlighted fund raisings of $16.3 billion in the 15 months to June as an indication of ongoing market support for the strategy.

Macquarie also reported a strong underlying profit of $916 million for the financial year ending in March, up 33 per cent from the previous year.

The results were propelled by strong growth in the bank’s asset and wealth management, which grew 28 per cent on the previous corresponding period, and in its lending business, which was up 14 per cent.

Moss also added that first quarter results for both financial services and funds management businesses were “well up” on the previous period, with funds management experiencing growth in volume across all asset classes.