Macquarie’s Dead Parrot Model

by | Jul 31, 2008 | Finance

If the Macquarie model’s not dead, it’s surely comatose and dangling upside-down with its claws super-glued to the perch.

Despite touting a glamorous 14% yield, the latest stapled infrastructure float, BrisConnections, has tanked 60% on its sharemarket debut. The chief reason is that people have twigged to the financial engineer’s lurk of the manufactured yield.

That is, they now understand they are simply being given back their own money after the Macquarie machine had slapped the structure together, raised debt with their equity and stripped out the fees up-front.

This one is an embarrassment for the Queensland Government and the state’s largest fund, QIC, which is a major shareholder. Although the Government could boast, at a stretch, that it has got its financing in the bag for the $5 billion Airport Link project and the fate of BrisCon and its shareholders is incidentally a matter for the private sector.

After all, retail investors are only said to account for 12% of the issue. Much of the rest of it is lumped with the underwriters – Credit Suisse, JP Morgan, Deutsche Bank and assorted Macquarie vehicles. Especially the latter. It’s a tad hard to tell from the cluster of nominee companies on the BrisCon Top 20 shareholders list, it appears Macquarie in-house entities account for 26%, or one-quarter of the $400 million issue.


Michael West

Michael West

Michael West established to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

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