Macquarie exits airport stake
The bank's decision to hand $1.4 billion of shares in Australia's largest airport to its own shareholders comes at a critical time for the airport's owners, which are trying to play down the need for a second airport in Sydney. The Abbott government has promised to name a site for a second airport within its first term.
It also puts an end to speculation that Macquarie has been trying to engineer a takeover for the airport to enable it to sell its cornerstone stake at a premium.
After unveiling a $501 million half-year profit on Friday, Macquarie said it would give its shareholders one share in the airport for each bank share they own. With an 18.6 per cent stake, the bank is the airport's largest shareholder and will book a $377 million gain on the handout of shares.
Macquarie's grip on the airport stretches back to 2002, when the Howard government sold a 99-year lease on the monopoly asset to a consortium led by the bank for $5.6 billion.
The bank's satellite airport fund emerged with an 83 per cent stake, and any concerns that it had overpaid for the airport quickly evaporated as the asset was squeezed hard.
"Sydney Airport has been a pretty important asset for Macquarie ... [and] it is very clear that they have done very well out of it," Legg Mason research analyst Andrew Chambers said.
The handover of shares to Macquarie investors was also seen as being "tax efficient" because a sale of the stake would have incurred capital gains tax. "By handing it over to investors ... [individual Macquarie shareholders] should avoid paying any tax until they decide to exit the investment," Mr Chambers said.
In the seven years after the airport was privatised, Macquarie received tens of millions in management fees from its satellite fund, which owned the bulk of the airport.
In 2009, the bank was paid a $345 million fee from Macquarie Airports for severing management ties, yet the airport continued to use Macquarie as an adviser. The airport disclosed in August that it would fork out $54 million in advisory fees and stamp duty to simplify its complex structure, but it declined to reveal how much of that was to be paid to Macquarie.
While the links are about to be severed, several of the airport's managers are former Macquarie executives, including boss Kerrie Mather.
"It will be interesting to see whether Sydney Airport changes the way it does anything," said one analyst. "When it comes to appointing managers, will so many of them come from the Macquarie stable?"
Despite losing the backing of Macquarie, the airport is still well connected in Canberra. Its chairman, Max Moore-Wilton, was a secretary of the Department of the Prime Minister and Cabinet under John Howard.
The latest deal still needs the approval of Macquarie shareholders next month. Macquarie chief executive Nicholas Moore said on Friday it was a "good time" to distribute airport shares to the bank's shareholders so they could "directly participate in its ownership".
Frequently Asked Questions about this Article…
Macquarie Bank is selling its stake in Sydney Airport to distribute $1.4 billion worth of shares to its shareholders. This move ends an 11-year involvement with the airport, allowing shareholders to directly participate in its ownership.
Macquarie Bank is selling its stake in Sydney Airport to distribute $1.4 billion worth of shares to its shareholders. This decision ends an 11-year involvement with the airport, allowing shareholders to directly participate in its ownership.
Macquarie Bank's exit will benefit shareholders by providing them with shares in Sydney Airport, allowing them to avoid immediate capital gains tax. Shareholders will only pay tax when they decide to sell their shares.
Macquarie's exit from Sydney Airport ends speculation about a potential takeover and shifts the ownership dynamics. However, the airport remains well-connected politically, and its management includes former Macquarie executives.
Macquarie Bank has reaped hundreds of millions of dollars in fees and dividends from its investment in Sydney Airport. The bank will also book a $377 million gain from the handout of shares to its shareholders.
Macquarie shareholders will receive one share in Sydney Airport for each bank share they own. This distribution is considered tax-efficient, as it allows shareholders to defer capital gains tax until they decide to sell their shares.
Macquarie Bank originally invested in Sydney Airport in 2002 when it led a consortium to acquire a 99-year lease on the airport for $5.6 billion.
Macquarie's involvement with Sydney Airport began in 2002 when it led a consortium to acquire a 99-year lease. Over the years, Macquarie reaped significant fees and dividends, and its satellite fund held a major stake in the airport.
Macquarie Bank initially held an 83% stake through its satellite airport fund and received significant management fees. Over time, it reduced its stake and eventually decided to distribute its remaining shares to shareholders.
While Macquarie's direct involvement is ending, several of Sydney Airport's managers are former Macquarie executives. It remains to be seen if the airport will change its management approach or continue to appoint managers from the Macquarie stable.
The distribution of Sydney Airport shares to Macquarie shareholders is considered tax-efficient. Shareholders will not incur capital gains tax until they decide to sell their shares.
Macquarie achieved substantial financial gains from its investment in Sydney Airport, including hundreds of millions in fees and dividends. The bank will also book a $377 million gain from the distribution of shares to its shareholders.
While Macquarie Bank's direct involvement will end, several of Sydney Airport's managers are former Macquarie executives. It remains to be seen if the airport will change its management practices.
The sale of Macquarie's stake comes at a critical time as Sydney Airport's owners are downplaying the need for a second airport. The Abbott government has promised to name a site for a second airport within its first term, which could impact Sydney Airport's operations.
Macquarie Bank's decision to distribute shares comes at a critical time as Sydney Airport's owners are addressing the potential need for a second airport in Sydney. The distribution allows shareholders to directly participate in the airport's ownership.
The share distribution plan requires approval from Macquarie shareholders, which is expected to be sought in the coming month. This approval is necessary for the plan to proceed and for shareholders to receive their Sydney Airport shares.
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