Macquarie steps up

Something once considered impossible has happened: Macquarie Capital is now advising a Babcock & Brown subsidiary on a major deal. Macqaurie will advise Babcock & Brown Infrastructure on the sale of its Dalrymple Bay coal terminal in Queensland, one of the world's biggest coal export ports. Already interest has been shown for both the mooted 49 per cent the market has been expecting BBI to sell and the whole project, thought to be worth around $1 billion after debt.

"The appointment of Macquarie will provide valuable input for the DBCT sales process," said BBI chief Jeff Kendrew. "Macquaire's appointment follows the recent engagement of Dresdner Kelinwort and RBS (UK) as joint advisors for the PD Ports capital optimisation initiative."

Babcock & Brown itself, which is said to be readying for a management buy-out, may be less impressed. Following the termination of the various Babcock-satellite exclusive financial services agreements, the mothership has seen its juicy mandates go to UBS, Gresham Partners, Deutsche Bank and Goldman Sachs JBWere among others (see Fee feast, February 26). But the latest announcement that MacBank is getting a guernsey will grate even more against the group that used to be called the "Mini Macquarie", especially as Macquarie continues to enjoy the deal-flow from its own family of funds. Unlike Babcock, Macquarie's satellites are all still travelling in orbit notwithstanding events such as Macquarie Countrywide's recent sale of $92.6 million worth of supermarkets to reduce debt.

Despite short-selling jitters, the scaremongering of hedge funder and Enron doomsayer Jim Chanos and the collapse of investment banking models across the world, Macquarie has managed to survive. Macquarie Capital in Sydney has beefed up its leadership team recently, adding three senior Lehman Brothers executives to its ranks. David Baron, Michael Meyers and Sean Fitzgerald, are now all managing directors at the group's advisory arm, joining ex-Lehmaner Timothy Gould, who came on board last year. Overseas, former Lehman vice chairman and Barclays executive Robert Redmond has also been appointed vice chairman of Macquarie Capital in the US.

But in terms of the all-important league tables, Macquarie only ranked thirteenth for MergerMarket's rankings of Asian (ex Japan) M&A volume in the first quarter. With four deals worth a total of $US1.497 billion, it was down from second position in the equivalent period in 2008 and didn't even appear in the top 20 Asia-Pacific ranking by deal value. In MergerMarket's ranking of mid-market M&A value, Macquarie fell from first to 12th place in the Asia Pacific and in terms of Australasian M&A deal value, it fell off the top fifteen completely. Only in Southeast Asia has Macquarie risen in the rankings, rising to sixth place from eleventh in M&A value.

Macquarie is however working on the biggest deal in the region and the sixth biggest in the world: Chinalco's offer for a bigger stake in Rio Tinto and a large chunk of its projects. Alongside Credit Suisse and Morgan Stanley on Rio's advisory panel, the deal could be a signal of better times to come for Macquarie advisors. And maybe as Babcock continues to unwind, there'll be more pieces to pick up in those areas too.