Macquarie aims for top broking spot

John Kavanagh
Macquarie Group has set its sights on cracking to top 10 in the global stockbroking market. The investment bank reported yesterday that its commissions for 2009 put it just outside the top group.

Speaking at an operational update yesterday, group head of Macquarie Securities Group, Roy Laidlaw, said the aim of the broking service was to be "research led".  It already had coverage of 2500 global stocks and would increase that number by 130 this year.

Macquarie claims the number-one position in Australia for warrants as well as stocks and the number-three position in New Zealand. It also claims to be the number one in "overall research and sales" in the US, Europe and Asia among Australian equity investors.

Its big gains have been in Asia, where the 2004 acquisition of ING's Asian broking business has been successfully integrated and has added 428 people to Macquarie Securities.

Asia will contribute 54 per cent MSG revenues in the coming financial year.

Laidlaw said the big target areas for growth were now the key markets of Europe and the United States. In Europe Macquarie has added scale by buying the equity derivatives and trading business and then the cash business of the German group Sal. Oppenheim in two separate transactions.

In the US it has been able to add resources from two recent acquisitions, energy advisory firm Tristone, acquired in September 2009, and FPK, acquired in November.

In terms of global research coverage, its recent acquisitions and organic growth have put it eighth in global ranking, ahead of Nomura, Morgan Stanley, HSBC and Barclays. It will need coverage of 3000 stocks before it can reach its next milestone and overtake Deutsche Bank Securities.

Macquarie chief executive Nicholas Moore said the group was on track to produce second-half performance (its financial year ends on March 31) in line with the first half, with the possibility of a 10 per cent increase in earnings over the first half.

Macquarie made a first-half net profit of  $257 million, down from $394 million in the six months to March last year.

While the emphasis at yesterday's briefing was on other parts of the business, Macquarie Capital group head Michael Carapiet made it clear that the group is not abandoning its controversial specialist funds business.

Recent fund launches include infrastructure funds in Mexico, Russia and India. It has raised $2.2 billion for these and other funds so far this financial year.

Carapiet said Macquarie had had some success in closing the valuation gap on its listed funds. Following a series of internalisations, sales and recapitalisations, the average market capitalisation of the funds increased 80 per cent in 2009, compared to the 50 per cent increase in the overall market.

One point that was made several times at yesterday's briefing was the increasing specialisation of the Macquarie business. As it becomes a more integrated global player it is presenting itself as an investment bank with expertise in six core sectors - financial institutions, industrials, infrastructre and utilities, real estate, resources and TMET (telecommunications, media, entertainment and technology).