Earn more, spend more

Macquarie Group's investment banking division – known as Macquarie Capital as of today – enjoyed record income in the September half when it pulled in $898 million in M&A, advisory and underwriting fees.

That's a rise of 52 per cent over the March half and 41 per cent over the September half. CEO Allan Moss noted the deal flow was strong, despite the challenging credit market conditions in the bank's second quarter.

In all, the bank completed 145 deals worth more than $92 billion in the half. Moss said the outlook for transaction was good, with the deal flow continuing to be strong in Asia, satisfactory in Australia, but quiet in the US and Europe.

The bank said one of the biggest contributors to investment banking fees was the $2.35 billion Boart Longyear IPO, masterminded by Robin Bishop as part of the bank's principal investment in the Dyno Nobel deal a year earlier.

It also advised Leighton Holdings on the $888 million purchase of a stake in Dubai-based construction group Al Habtoor E&C, Singapore's MMI Holdings on the $856 million acquisition by Kohlberg Kravis Roberts, Amtek Engineering on its $405 million acquisition by CVC and Standard Chartered Private Equity, and Korea Multiplex Investment Corporation on the $359 million acquisition of Korean cinema chain Megabox Inc.

Interestingly, other major contributors cited by the bank – but sadly with no further breakdown of fees – were the design and construction of the Peterborough Hospital in the UK and the purchase by India's Tata Power Company of equity stakes in two major Indonesian coal producers.

Overall, the investment banking division, including all strands of its operations including ECM and specialist funds, increased profits by 55 per cent in the half and contributed 46 per cent of total profits (up from 38 per cent).

But while more fees came in the door, fees were also traveling swiftly in the other direction. Expenses relating to the restructure to establish Macquarie Group as a non-operating holding company caused a 30 per cent jump in professional fees in the half to $117 million.