Macquarie has sights on commodities acquisition

Nicholas Moore, Macquarie’s CEO, says the investment bank examines commodity trading businesses when they come up for sale - but will not over pay.

Nicholas Moore, chief executive of Macquarie Group, says acquiring a commodities trading business may make sense for Australia’s biggest investment bank, but warned competition for such businesses is voracious and the company would not over pay.

At a news conference in Sydney today, Mr Moore said Macquarie had been named as a potential bidder for a commodities business, indicating he was not disagreeing with news reports earlier this year that named the company as a potential acquirer of J.P. Morgan’s physical commodities business.

“As you know we have been disciplined in terms of how we approach these matters,” Mr Moore told reporters. “We have a strong base though obviously in the United States and other places, so picking up business there is possible. But it is competitive.”

Wall Street banks have shed, scaled back or shut down their commodities businesses because of unfavorable US banking regulation. Mercuria, led by former Goldman Sachs executives Marco Dunand and Daniel Jaeggi, bought the J.P. Morgan physical commodities business for $US3.5 billion.

Commenting on the outlook for merger and acquisitions, the Macquarie CEO said if confidence continues to underpin financial markets, merger and acquisition activity will continue to improve, much of it the result of cross border activity. Companies from China, South Korea and Japan are showing an appetite to do deals, Mr Moore said, adding “we’ll continue to be well positioned for those flows.”

In the first four months this year, global M&A deal value was $US504bn, up from $US142bn for the same period last year, according to Credit Suisse. In the 12 months to March 31, Macquarie globally advised on 450 transactions valued at $89 billion.

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