After we ran our original piece on Macquarie Bank’s dud Sydney airport deal, there has been a deluge of contributions on the Millionaire Factory’s worrying deals. We lay our cards on the table for CEO Allan Moss to get ready for a lengthy grilling at their AGM on 25 July.

While things haven’t gone completely pear shaped for the Millionaire Factory, plenty of things have been unraveling and Crikey has been leading the charge to expose their woes, with our sealed sections almost turning into a daily serial on Macquarie’s various woes.

Here we lay out the choice cuts, which will give us plenty of fodder for the upcoming AGM on 25 July.

Macquarie v The Parrot

There’s a golden rule in Sydney – don’t get the Parrot offside.

Whether you’re a pollie, sportsperson, artiste or business type, if you ruffle the Parrot’s feathers, he’ll squawk.

So Macquarie’s head of investment banking, Nicholas Moore, committed the cardinal sin when he slagged off the Parrot about his favouritism of AMP in the Sydney Airports bid. Here’s how Hillary reported the fracas in his July 17 Parrot Droppings:

“Bird watchers are eagle eyed – so last weekend the Crikey Bird Watching Team quickly spotted the quarter page ad in the Fin Macquarie Bank took after exec Nicholas Moore bagged the Parrot for his squawks on the sale of Sydney Airport.

Moore was on a high after the $5.6 billion deal – and forgot just how high the Parrot sits in the urban jungle when he had spoken to the Fin earlier in the week. The final item then made interesting reading:

” ‘I don’t think anyone really cares what he thinks,’ Moore says. The fact Jones has the ear of Prime Ministers and Premiers, not to mention 16 per cent of Sydney’s breakfast audience, is of little concern to the new overlord of Sydney Airport.

“He says Jones is running a campaign on behalf of [rival bidder] Gateway and its backer, AMP, which ‘were sending out their hate file to everyone they could think of’.

“And Jones is ‘famous for his impartial comments’, says Moore, in reference to the radio ‘cash for comment’ controversy.

” ‘Maybe we’re naive to believe that he has no credibility, but in ‘cash for comment’ one of the people who was paying for him was AMP,’ Moore says.”

Moore’s bosses realised the damage done, and were quick to tell the world that his comments “were not the Bank’s” and apologise unreservedly “for any inference that Mr Jones’ views were other than his own.”

How did the Parrot react? Let’s just say there musn’t’ve been much left of his cuttlefish when he finished sharpening his beak and his claws. He went for Moore and Macquarie…”

– Ends –

Did he what?!

The Parrot fired up with editorials on 4 July and 5 July about Macquarie’s involvement in Sydney’s orbital tollway, slamming the Millionaire Factory from pillar to post.

Things got so bad that the top brass from Macquarie and the Parrot had a meeting to smoke the peace pipe and the Parrot has been noticeably silent on Macquarie since. Too much seed in the beak, perhaps?

And here’s what we said in our sealed section of July 3:

“5.5. THE MILLIONAIRE FACTORY AND THE PARROT

This was from the AFR last week:

“And if the falling share prices weren’t enough, Macquarie’s chief executive-in-waiting, Nicholas Moore, then stumbled into a war of words with NSW’s alternative premier and broadcaster, Alan Jones.

As Moore told two AFR journalists on Thursday afternoon: “I don’t think anyone really cares what he thinks.” Perhaps realising that Jones actually has significant influence, the bank quickly decided to distance itself from Moore’s comments.”

A one-quarter page advertisement appearing in the AFR’s Saturday edition on page 17, purchased late on Friday afternoon, clarified the bank’s position. It read as follows:

“A ‘Rear Window’ column item published in the AFR this week (Wednesday June 26) mentioned negative remarks by radio commentator Alan Jones about the Southern Cross Consortium’s winning bid for Sydney Airport and the Gateway consortium, which included AMP and Deutsche Bank. Comments made by Macquarie Bank officers following the item’s publication only repeated the speculation contained in the article and were not the Bank’s own views. Macquarie Bank apologises unreservedly for any inference that Mr Jones’ views were other than his own.”

For the record, Rear Window has never stated that no-one cares what Alan Jones thinks and isn’t it pathetic seeing a major corporate groveling to the Parrot like that. When is someone going to stand up to the clown?”

– Ends –

And finally, the fallout from the vicious pecking attack seems to have been felt by Moore, as Lachlan Johnston reported in his Fin Review Rear Window column on 17 July, writing on the announcement of Macquarie’s Rome airports purchase:

“…And finally, the executive whose absence was a statement in itself – Nicholas “Anonymous” Moore, the so-called architect of Macquarie’s infrastructure strategy. Moore was nowhere to be seen as his one-time understudy [Anthony “Larry”] Kahn soaked up the limelight.

“South African-born Kahn, whose middle name is actually Larry, seems to be emerging as a real threat to Moore’s ascension to the Macquarie chief executive chair.

“Moore probably had little choice, since the burning ember he accidentally poured petrol on, Sydney broadcaster Alan Jones, took aim at the bank on several fronts yesterday…”

– Ends –

Question one for the AGM: Why the heck did Macquarie hang one of their boys out to dry and cuddle up to the Parrot when they should have been taking a stand against the Parrot and defending their boy?

Macquarie’s other over-priced bids

Sydney Airports wasn’t the first time Macquarie paid way too much for an asset.

As we reported in our sealed section on Monday 8 July, it seems those inside Macquarie agreed that they’d paid way too much for the Victorian Loy Yang power station back in 1997:

“MACQUARIE BANK – LOY YANG

An insider at Macquarie Bank tells us that when the Loy Yang – Horizon offer was being put together all of the executives at the bank who were involved knew that they were paying way over the top.

They openly admitted as much to each other, but carried on regardless because of the huge bonuses and option values that were going to be generated for them.

End result: lots of small investors – superfunds and pooled private investors – lost most of their money.

But a wealthy Melbourne family (our source doesn’t say who) with a bit of stroke around town sued (or threatened to sue) and were paid compensation. Other investors were not compensated and can’t be because of confidentiality clauses.

Our source says that the airport looks like a repeat.

A job for the Parrot, perhaps? (Read Hillary’s Parrot Droppings for more.)”

– Ends –

And while we’re on the subject of infrastructure, here’s what we passed on to subscribers on 3 July:

“In your list of Macquarie Bank’s misdeeds you forgot to mention their Hi-Yield Infrastructure Fund. Launched circa 1996/97 through an Info Memorandum; i.e. only to those who can cough up $500,000 and a blaze of fanfare. Not heard of since. Can’t even find a report on their web site. Must be doing well . Reckon they sold it as bank bills plus 3% return. Supposed to invest in infrastructure debt. Did anyone say Loy Yang?”

Name Withheld”

Macquarie’s telco worries

Macquarie’s problems don’t end at the domestic passenger terminal or the power plant. Their forays into the brave new world of telecommunications have been troubled, to say the least, as we were told in our 3 July sealed section:

“5. MACQUARIE BANK SKELETONS

A Macquarie Bank follower writes:

Crikey,

I’m enjoying your thoughts on Macquarie Bank. On the Macquarie Global Infrastructure Fund – take a deeper look at NextGen as it’s about to blow up because $400 million was invested by GIF, Deutsche, Leighton et al and they have to make a decision soon on whether to chip in another $400 million. It’s an unmitigated disaster.

Name Withheld

CRIKEY: This makes sense given the global telco meltdown. This is what Nextgen announced on August 9, 2000:

Nextgen Networks today announced that it will develop an $850 million national optic fibre network of approximately 8,400 km in length extending from Brisbane to Perth via Sydney, Canberra, Melbourne and Adelaide.

Nextgen Networks is a business venture between Leighton Contractors and Macquarie Bank. Lucent Technologies (NYSE: LU) will be the supplier of technology and services.

Nextgen, will be Australia’s first true independent, wholesale high bandwidth network owner and operator. Lucent Technologies will provide the next generation of optic fibre technology which will be introduced for the first time into the Australian market and will also supply operations and maintenance support once the network has been completed. The network will provide cost competitive, high quality bandwidth services to domestic and international telecommunications carriers, Internet Service Providers (ISPs), major corporates and government users.

The project will be financed by debt and equity. Project debt has been underwritten by Deutsche Bank. It is intended that debt will be syndicated to a group of local and overseas banks by year end. Macquarie Bank, Nextgen’s financial advisor, is well advanced with the placement of Nextgen’s equity with local and overseas institutions.

“This is a landmark financing in the local telecommunications sector and has been underpinned by the calibre and strength of the consortium,” said Mel Woods, Director, Macquarie Bank.”

Macquarie’s industrial relations problems

And Macquarie’s problems aren’t just on the outside, either. The industrial relations “culture” within the Factory is interesting, and then some.

From our 2 July sealed section:

“24. MACQUARIE BANK INSIDER

Some anonymous hotmailer from Macquarie’s Asian operation has offered us these insights into the millionaire factory’s culture:

“My experience is that MBL has a structural deficiency in handling its “problems”. Due to the place being heavily geared towards rewarding big profits everyone runs a mile from clean-ups or prolonged deals and there is a somewhat of a gambler’s attitude to using investor funds.

This is basic management agency theory: deal works, we all share the upside; deal fails, it’s the investors’ dough – next. So it is interesting the angle that you are exploring about MBL’s less great investments. No Bank employee in my experience ever makes the mistake twice of working on a clean-up or wind-down.

Senior management say you’ll naturally be rewarded for saving $50 million as surely as making it, but I don’t know any case where this has happened – just frustrated souls at bonus time. I know this is not unique to MBL, it’s human nature, but it certainly seems so in here.

Lastly, another structural problem is a growing top-heaviness of management. There are a lot of executive directors who have not earned a cent in a long time (but have certainly risked a few), but still receive considerable incomes (well, their lifestyles are still just as opulent). Some call it the “Christmas Tree” management structure: branches are the three levels of directors, the narrow trunk middle management and the sizable base is the graduates.

Very few graduates will find a career path to the branches – less so the ones with real talent who might start eating into the directors’ profit pool. So many leave frustrated after about 3 years. Hence MBL has a staff turnover north of 30% per annum, very high for any industry!

This further compounds the problems of investment management as a helluvalot of IP goes out the door forever each month (or goes into competition). I’ve seen the entire management team of multimillion dollar funds leave and absolutely nothing done to stop it!”

Anonymous”

– Ends –

And the courts have on occasion seen the odd gripe settled by Macquarie with disgruntled former staffers. Also from our July 3 sealed section”

“On the subject of Macquarie Bank you may find it interesting to take a look at a couple of court cases in the NSW Industrial Relations Commission.

Although it is a bit old, “Graham v Macquarie Bank Limited (2000) NSWIRComm 253 (15 December 2000)” accessed on the web at http://www.austlii.edu.au/, gives an insight into the internal politics at the upper levels of MBL. MBL came off second best in that one.

There is another MBL case reported in the same index involving a couple of traders who went to Asia with MBL and lost their jobs when the wheels came off. I can’t remember the name of the plaintiffs but I believe it is still on going.”

Macquarie’s dud film and TV fund

Macquarie’s recently launched movie and TV fund – a joint venture with PBL – is struggling to fire up the market, as a culture vulture pointed out to us:

“For an optimistic ask of $62.5million, Macquarie has raised a lukewarm $23.6m from its film and television prospectus. This will fund a couple of Nine TV series, “The Young Lions”, and another series of “McLeod’s Daughters” (yawn), two Queensland based feature films, “Getting Square” and “Under The Radar” (this last one is interesting because it will necessitate one of the principals behind the project, Chris Fitchett, moving to Queensland for a year or so. Chris Fitchett was one of the prime movers on Delahunty’s Victorian Film and TV Task Force, a motley crew who busied themselves primarily producing tired old stats about how production was moving to NSW, and yes, Queensland.)

The last project is a telemovie, “Postcard Bandit”, to be produced by Ross Plapp, a long time Ten programming honcho. The upside to this ho-hum raising is that most of the worst material that would have been funded will now be consigned to continuing development hell or the bin, for which discerning cinema goers can only be thankful.

Anon”

Commonwealth Bank’s narrow escape

The CBA was to be part of Macquarie’s Sydney Airports syndicate, but as we reported on 9 July, came to their senses at the eleventh hour and bailed out:

“MORE ON MACQUARIE BANK

The stories keep rolling in on Macquarie Bank. An anonymous sole subscriber reminds us:

“It seems that the Commonwealth Bank’s 11th hour withdrawal from the Southern Cross syndicate slipped by without too much attention. There are no prizes for guessing why they pulled their equity off the table. [CBA CEO David] Murray has to get the “Dodged Bullet” award on that one. Although I do note that CBA is still in the lending syndicate. But hey, isn’t that what a bank does – lend money?”

And this sole subscriber has also alerted us to another under-performing trust, the Macquarie Leisure Trust.

We haven’t had an opportunity to get dirt under the fingers yet and do some real digging, but a few things about this are curious.

On their website, they have a section purporting to show the trust’s performance which includes a rather confusing graph titled “Macquarie Leisure Trust Accumulation Index vs ASX Property Trust Accumulation Index”. The two lines on the graph clearly show MLT outperforming the ASX comparable, and distinctly show the MLT index being a good 30% above where they started on listing in July 2001.

But when you get a detailed quote from the ASX, it shows that the share price has floundered over recent years dropping from over 90 cents in 98/99 to under 50 cents in 2001, before recovering to around 65 cents recently.

And that’s another strange thing – the Macquarie site says MLT listed in 2001, but ASX price quotes show that it has been listed considerably longer.

So perhaps the share price has recovered 30% since July 2001, but it doesn’t take into account a massive slump before then.

Once we’ve made sense of this muddle, we’ll have more on it for Crikey subscribers and probably a few questions at their upcoming AGM.”

– Ends –

Well, we still haven’t made sense of it, so we’ll probably have to fire this one off at the chairman for their upcoming AGM.

Macquarie’s generous executive remuneration

No Crikey tell-all business yarn would be complete without an executive remuneration bash, so here goes (from the Wednesday 10 July sealed section):

“9. MACQUARIE BANK PAYOUTS

A former Macquarie Bank insider writes:

“I’ve been following your material on the millionaire factory with interest. My only concern is that while much of the stuff you (and your contributors) write about the bank is true (maybe 70%), some of it is pretty wild – the main case that springs to mind is the story about MIG’s accounting by “Abacus” (from memory) where this poor soul tied themselves up in knots by confusing future cash flows with present value and made absolutely no sense.

But as far as the executive compensation goes, I’m right on the bandwagon with you. Did you note the highest paid executive this year? It wasn’t CEO Allan Moss but ex-Equities top dog Richard Jenkins ($7.4m due to retirement benefits vs Mossy’s lowly $6.1m). What we’ve been unable to ascertain is whether these benefits went through the P&L as they accrued or whether they went through in one hit last year? I shudder to think how much has accrued to Allan Moss, David Clarke, Mark Johnston and co and how much the bank will have to find on the day they retires – each could make ex-AGL chief Len Bleasel’s $11.7m payout look like chicken feed!

Could be a good question for the AGM.

Regards, Name Withheld

CRIKEY: This is a very good point. Radio giant Austereo notes a $35 million liability in its accounts for all the contract obligations it has to its on-air talent. What is the equivalent figure for Macquarie if little known executives are getting $7 million payouts? Incidentally, how hilarious that Allan Moss turned up to the Parrot’s pad for a meeting to try and smooth the waters. Isn’t it nice being completely independent such that you can sledge people like The Parrot and Eddie McGuire and they can’t do anything to hurt you or force you to grovel. Poor old Mossy. We agree with everything that his infrastructure boss Nick Moore said about The Parrot but the level of subsequent grovelling has been appalling.”

Coming up in the sequel…

Sadly, that’s the end of the tale for now.

Of course, we haven’t yet touched on the Brisbane Airlink, which was arranged/sold by Macquarie and has proved a complete flop.

And a subscriber also tells us that “they also had a couple of people doing dot.com stuff at Macquarie Technology and I’m sure there are some dirty little secrets…”

We’ll have to save that for next time, folks!

Here’s the original piece we ran earlier in the month…

The jury in the court of public opinion is still out as far as the Macquarie Bank syndicate’s purchase of Sydney Airport is concerned.

But we here at Crikey like to lead public opinion and put the head on the chopping block early.

We called it a dud and stick by the assessment. Here’s what we’ve had to say in our subscriber updates on the airport deal and various other Macquarie investments which aren’t travelling all that well.

Sealed section 25 June 2002:

“1. SYDNEY AIRPORT SALE BONANZA

You would hope that Macquarie Bank would have learnt their lesson after putting together the syndicate that paid $4.75 billion for Victoria’s Loy Yang A power station, which at the time was hailed as the biggest government trade sale in Australian history.

Macquarie collected about $30 million in fees but have seen their Loy Yang equity investment plunge because their syndicate paid at least $1 billion too much.

Earlier this year, Macquarie went over the top by paying $850 million for NTL’s Australian business so they could package it up in a new listed fund.

And now they’ve stumped up a ridiculous $5.6 billion for Sydney Airport in the hope they can cream more than $30 million a year in fees out of their new airport fund and emulate the rivers of gold that flow from their world’s biggest tollroad fund, Macquarie Infrastructure Group.

Macquarie’s Sydney airport assumptions are ridiculously bullish, but the government have boosted the price by almost doubling aeronautical charges, not regulating future price rises and banning any rival airport development within 100 kilometres.

Macquarie are going to have to work their monopoly super hard to make it pay but they are dreaming of almost doubling revenues in the next few years.

Now that everyone has worked out the tollroad lurk, the game is up for Macquarie and they have to pay ridiculous prices to get seed assets for their funds.

Ironically, they have more than tripled their money on the tollroad that leads to Sydney Airport – the Eastern Distributor. And the giant German construction outfit Hochtief/Leighton are Macquarie’s partner in the airport and the tollroad, but they thankfully pulled out of the Loy Yang consortium at the death.

Crikey has already paid for his ticket to Sydney for the Macquarie AGM in late July but we’ll need several hours to get through all the issues thrown up by the millionaire factory.”

We followed that spray up with the following in our sealed section of 28 June 2002:

“3. SYDNEY AIRPORT FEE FRENZY

Can you believe that the total fees ripped out by everyone in the Southern Cross Sydney Airport consortium is an incredible $175 million? This has surely got to be some sort of record. Macquarie pockets $50 million and the rest is spread around all the other bankers, advisers and investors.

Is it any wonder that shares in the recently floated Macquarie Airports Group have plunged 12c to 77c this week after floating at $1 just a few months ago. They paid $640 million more than their nearest rival and then loaded another $175 million in fees on top of the $5.6 billion they paid.”

Macquarie’s hopelessly conflicted property deal

But Macquarie aren’t all tollroads and airports, they also have interests in property as well which provide them with nice little fee earners as well, as we pointed out in our sealed section of 13 May 2002:

“13. MACQUARIE BANK’S RENTAL DEAL

Crikey has written before about millionaire factory Macquarie Bank and the extent to which they take enormous fees out of the infrastructure trusts set up to finance toll roads.

Well, did you notice last week that the 24-storey Sydney office building, No 1 Martin Place, was sold by Grocon to the Macquarie Office Trust (MOT) and another Macquarie Trust for $426.25 million?

MOT is a listed office trust.

Who is the major tenant of No 1 Martin Place? None other than Macquarie Bank itself.

So in future, the fund manager at Macquarie Office Trust will need to negotiate the rent and fit-out and refurbishings and maintenance that Macquarie Bank pays.

How do you avoid that conflict of interest?”

Lights, camera, inaction?

Now Macquarie is stretching its enormous fee-earning tentacles into the world of film as we reported back in May (but perhaps in not as gushing terms as Media Watch accused Channel 9 of doing).

Our anonymous contributor wrote:

“16. MACQUARIE GETS INTO BED WITH PACKER AGAIN

Last Monday night, Macquarie and The Nine Network held a function in Crown Casino’s River Room to launch their float to raise $62.5 million for a slate of film and television production.

You have to wonder why bother ‘launching’ at all in Melbourne, when the prospectus has been out for about six weeks, preceded by a huge bash at Fox Studios in Sydney for all comers. Unless of course they’re worried they might be under-subscribed – and given the calibre of most of that slate, well they might be.

Hoyts are also in with Nine and Macquarie, but where were the Hoyts boys on Monday?

Where were the potential investors?

It was a decidedly low-key affair up there in the River Room, and discounting the few filmmakers invited, various Macquarie staff, two or three naff Nine-type celebs, Lillian Frank, I reckon there were about two moneybags in the room.

Talking of naff Nine types, star of the show was our Eddie, who gave a tragic speech from the podium about Aussie films to the world, before telling everyone to get home quick or else they’d miss Millyanaire.

Charles Wheeler from Macquarie is a nice bloke, but no public speaker, and after saying he was going to be brief, he bored everyone for about 20 minutes and spent the rest of what was left of the evening chatting up Jennifer Keyte.

It was all very dull and pointless, and judging by some of the looks exchanged between some of the senior Macquaries, wouldn’t be surprised if blame will be swiftly and roundly apportioned and maybe a head or two will roll.”

Telecom woes

In our sealed section of 3 June 2002 we reported on Macquarie’s purchase of troubled telecom, NTL:

“19. MACQUARIE OVERPAYS FOR NTL

A merchant banker writes:

Dear Crikey,

“Abacus’s” piece on Macquarie Infrastructure Group (MIG) accounting was interesting. If a persistent rumour circulating the market is true, it seems an error in the calculation of the discount rate when valuing NTL is a major factor in Macquarie making an $850 million offer which was so much higher than anyone else.

Eager for a quality asset to seed their upcoming Communications Fund, apparently they worked around the clock to model the business, derive a valuation and slap-down a cheque before any other bidders did.

Surely it can’t be true, but then again nobody else since has been able to reconcile the amount they paid. We know what they say about haste…”

Macquarie’s troubled investment funds

And finally, let’s take a look at some of Macquarie Bank’s more troubled investments.

This really is a roll call of broken promises and unfulfilled projections.

1. The Macquarie Apollo Trust

Apollo is Macquarie Bank’s hedge fund. It is a “fund of funds”, which means Macquarie manages investments in other funds on behalf of Apollo investors.

When it was launched in mid 2001, it quoted “simulated performance” from historical returns by funds that Macquarie would use for Apollo.

From 1996 to 2000, the relatively constant per annum average return was 15.2%.

Investors placed $118 million into Apollo, with much of it borrowed from Macquarie with handsome fees and margins thrown in, on top of the fees for managing Apollo.

The most recently available results to investors for the nine months to 31 March 2002 show a year to date return of negative 0.1%. The comparable index return was 4.42%.

So much for the “simulated” 15.2%.

2. The Macquarie Aircraft Notes (Mac Notes)

In June 1999, Macquarie launched a Trust to finance the purchase of Saab aircraft for (wait for it) Hazelton Airlines.

With the collapse of Ansett, Hazelton was placed into liquidation.

Initially, Macquarie negotiated with the administrators to defer 50% of the rental due. Then, Macquarie was advised that the airline would cease trading if further revised terms could not be agreed, and deferred 75% of the income.

Investors have been advised that even if the sale of Hazelton to Australia-Wide goes ahead, net proceeds from the Notes will be cut significantly, as lower rental returns will be offered to the purchasers of Hazelton. Investors were required to make another net contribution in the 2001/2002 financial year.

3. Macquarie Private Equity Trust I

Macquarie opened its private equity funds to retail investors in May 1999. To quote Macquarie’s own website, “Private equity is simply the purchase of equity in a company that’s not listed on a stock exchange”.

Macquarie claims that their private equity trusts enable investors to buy into companies “before the rest of the market has access to them”.

Macquarie raised over $207 million, including $85 million from retail, but only $100 million has been invested.

Evidence that it is struggling to find worthwhile investments is the fact that it is now investing in listed companies. This is totally outside its mandate for finding undiscovered private companies and nurturing them on to the market.

A classic example is SMS Management, the old Sausage Software, in which the Private Equity Trust is now a major shareholder. This is a listed company which anyone can buy into without having to pay Macquarie’s high private equity fees.

So much for offering a different asset class which private investors cannot normally find.

To make matters worse, Macquarie has now launched its Private Equity Trust II, bringing in more fee income before the first fund is fully invested.

Where will the next good deal be placed?

4. Macquarie Global Infrastructure Trust (GIFT)

If there is one business Macquarie Bank should know, it is infrastructure. How it decides which of its vast number of deals goes into which Fund, only Macquarie knows. GIFT raised $263 million, including $70 retail.

It is difficult to know how GIFT is performing overall, as revaluations are not regularly available, but a June 2002 letter advised:

“Detroit-Windsor Tunnel: Traffic flows, significantly down immediately following the terrorist attacks, have steadily improved and are now generally 15-20% below the same period last year. The forecasts have been revised downwards and have been a major cause in the decrease in the value on the investment from $37.6 million to $28.3 million. This represents a 19% decrease on the original acquisition price.”

Other assets of the Trust include Reef Networks, whose sole client is SingTel (previously Optus), and NextGen Networks, a cross Nullabor network. Hardly in the same class as the M2 motorway.

5. Mac IT 2000 Trust

Macquarie manages one of Australia’s largest computer equipment and leasing businesses. It is run through the Mac IT 2000 Trust.

This Trust appears to be performing reasonably, but in June 2002, investors were advised that additional net cash requirements from investors for 2001/2002 would be higher than forecast due to a lower than expected net profit.

6. Macquarie Managed Investments, Australian Share Funds

Despite Macquarie’s reputation as a fund manager, it has failed to establish any track record or decent fund growth in the biggest sector of the Australian market, the broad Australian equity market.

While fund managers such as Perpetual, Platinum, MLC and Colonial First State have all generated long term performance of over 10% per annum, and inflows of billions of dollars a year, Macquarie Bank’s two major Australian equity funds are:

* Australian Share Fund. Balance $31 million, launched 1994, 5 year performance 4.63%.

* Imputation Fund. Balance $24 million, launched 1998, 3 year performance 5.37%.

Heaven help performance when we are not in a bull market. The total amount which Macquarie Bank has generated into these funds over many years is less than the weekly inflow into the funds of successful managers.

Macquarie is simply not on the radar as an Australian equity fund manager.

Peter Fray

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