Back on the road to higher-risk deals

THERE were shades of Macquarie of old as the word ''infrastructure'' crept back into the investment bank's shareholder briefings.

After blowing hundreds of millions on infrastructure write-downs following the financial crisis and exiting several troubled satellite funds, the investment bank is again talking up infrastructure as a means to underpin earnings.

Macquarie still ranks as the biggest infrastructure fund manager in the world and, as profit falls away in other areas, infrastructure is again proving a constant income stream. In the latest year, base fees and bonus fees for managing tollways and utilities generated $1 billion in revenue for Macquarie. Meanwhile, advising stricken governments around the world on asset sales has provided much-needed work for Macquarie's investment bankers.

Since the financial crisis, Macquarie has curbed its higher-risk infrastructure deal-making to focus on businesses that give it annuity-style income. This extends to wealth management and the management of infrastructure on behalf of superannuation funds.

Meanwhile, with Macquarie's profits and investor returns heading down, so are bonus payments to its top executives. Gone are the days of pay cheques in the tens of millions of dollars for top executives, although returns are still measured in the millions of dollars.

The latest profit result shows chief executive Nicholas Moore was paid $7.79 million in salary, bonus, benefits and vested shares over the past year, down from $8.69 million a year earlier. This included a $2 million cash bonus, down from $2.7 million last year.

Macquarie's investment banking head Tim Bishop took a hefty pay cut as his business struggled in the face of a tough M&A market. Mr Bishop was last year paid a total of $998,732, well down on the $3.78 million a year earlier.

Macquarie was once known as the ''millionaires factory'' for its payments to top executives. At the peak of the sharemarket boom, former chief executive Allan Moss and Mr Moore, then Macquarie's investment banking boss, each took home in excess of $20 million.

Return on equity, a gauge of how well Macquarie reinvests shareholders' earnings, was 6.8 per cent, well below the bank's cost of capital and down from 8.9 per cent last year.