Macquarie Group's plan to distribute its $1.4 billion stake in Sydney Airport to shareholders has sparked predictions the bank will look to offload more legacy businesses in a bid to lift returns.
On Friday, Macquarie said it would give shareholders one share in the airport for each share held in the bank, provided investors approved the proposal.
As its stock surged to a four-year high, the plan put the spotlight on the bank's "legacy" assets, stakes in various businesses that it acquired under the "Macquarie model" of managing listed satellite funds.
With asset prices rising, analysts said Macquarie may be in a better position to offload some of these assets, which have tied up capital for relatively low returns.
Shaw Stockbroking analyst David Spotswood estimated the bank was holding about $2 billion in assets that were earmarked to be sold.
Selling assets is likely to lift return on equity by directing the capital into higher-return investments.
"Macquarie is very focused on getting their return on equity up. That's where the bonus pool is paid from," he said.
Macquarie's grip on Sydney Airport stretches back to 2002 when the Howard government sold a 99-year lease on the monopoly asset to a consortium led by the investment bank for $5.6 billion. The bank's satellite airport fund, Macquarie Airports, emerged with an 83 per cent stake.
By giving its investors its 18.6 per cent stake in the listed entity that emerged out of Macquarie Airports, the bank is expected to lift return on equity, which was 8.7 per cent last year, by one percentage point.
Chief executive Nicholas Moore said the airport stake was "unique" and the bank was very unlikely to distribute assets in the same way in the future. But he also said a lift in market confidence had allowed the group to shift assets more quickly than during the global financial crisis, noting recent sales of its Canadian broking business and a stake in OzForex, which listed on the ASX last month. "We have $5.5 billion worth of equity positions on our balance sheet, they're always coming and going, as it were," he said.
Mr Moore said the group's turnover in these assets, which slowed sharply when the GFC hit, was probably returning to "historic" rates.
"I think overall, when you look at our positions, they will be continuing to roll; they'll be rolling at a faster rate, I'm guessing, than they were a few years ago. But it's probably no faster than it would have been in 2008," he said.