November 6, 2017 Read More →

Macquarie Group Moves Deeper Into Renewables

Australian Financial Review:

When shares in Macquarie Group came within a whisker of cracking the $100 mark on Friday it was a sign of the growing market confidence that its 14,000 employees in 27 countries would continue to prove adept at making humungous amounts of money. Macquarie stock hit an intra-day high of $99.75 on Friday, about 50¢ higher than the previous record high set in May 2007.

The move toward $100 a share comes soon after Macquarie employees sent a clear message to chief executive Nicholas Moore to direct the bank’s energies toward servicing a low-carbon economy.

Employees were asked where the best money-making opportunities would be in the years ahead. They came back with three words – renewables, infrastructure and technology.

In calendar 2016, the total amount of new investment in renewable energy projects in the world was $US240 billion, according to Tim Bishop, who heads Macquarie Capital. He said that outstripped the $US180billion invested in all other infrastructure projects in the world including rail, ports and airports.

Bishop says the growth rates baked into renewable expansion are hard to comprehend. Macquarie’s own forecasts are for $US1 trillion in investment in renewables infrastructure over the next five years. Bishop says about $US600 billion of this will be in Asia.

Earlier this year a Macquarie-led consortium comprising Macquarie Group, Macquarie European Infrastructure Fund 5 and Universities Superannuation Scheme completed the acquisition of the UK Green Investment Bank from the British government for £2.3 billion.

Bishop says this acquisition was a turning point for Macquarie in Europe because it not only acquired one of the region’s largest group of bankers with expertise in renewables it got control of a pipeline of renewable projects.

If Macquarie plays its cards right it could well become the global leader in financing green infrastructure projects using a combination of debt and equity. This would give it a distinctive differentiation from other investment banks in the United States, Europe and Asia.

To be brutally honest these banks are caught up with traditional business models focused on high-risk trading in financial markets and fighting to win the next M&A transaction.

Macquarie has an opportunity to dominate the renewable energy space because of its unique business model. That model has evolved rapidly since the global financial crisis.

Its specialist alternative asset manager, Macquarie Infrastructure and Real Assets, is a leading renewable energy investor. Since 2010 it has invested or arranged about $15 billion of investment into renewable energy projects.

Moore says that the past 12 months has seen a tipping point in the relative attractiveness of renewable energy.

“There’s a number of important landmarks that we’ve seen in recent times that really shows that green energy is coming into its own,” he says. “There was an auction for offshore power in Germany in the last 12 months which was significant. This auction was for offshore wind power – wind farms built in the North Sea. We noted that the winner actually was with a zero subsidy from the government.”

More ($): Macquarie Group sees big dollars in renewable energy investment

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