Kim Beazley’s big education speech this morning called for
Australia to create more engineers and less merchant bankers. Alas,
who’d want to get their hands dirty for a relative pittance when all
the evidence suggests the fastest way to wealth in Australia is joining
Macquarie Bank, the ultimate Millionaire’s Factory.
Crikey met a commerce student from Sydney University at this year’s
Macquarie AGM and he said all his colleagues aspired to a career with
the Millionaire’s Factory. This points to how the bank is able to hire
and nurture the best and brightest honours students that Australia’s
commerce and economics faculties can produce.
Macquarie Bank shares are up another 45c to a record $77.15 today,
increasing the bank’s market capitalisation by $104 million to a
staggering $17.768 billion.
Similarly, Macquarie’s Mini-Me, Babcock & Brown, has today
jumped 43c to a record $21.03, valuing that business at more than $5
However, these figures actually understate the true market valuations
of both businesses, because of the enormous number of in-the-money and
unexercised options out there.
The last Macquarie annual report reveals that in the year to 31 March 2005, it issued 10.3 million new options
at an average strike price of about $34. These are now showing paper profits of about $445 million.
Excluding options issued after March 31 this year, Macquarie had 13% of
its capital already outstanding over 28.3
million shares and they are carrying paper profits of almost $1.5
billion which are not included in that official market capitalisation
figure of $17.768 billion.
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All of this provides quite a dilemma for BRW as it
next year’s Rich List and decides whether to maintain its strategy of
not including a single Macquarie or Babcock executive. The Crikey
Revised Wealth (CRW) list included
about 10 investment bankers from the two firms but the
doubling of both stock this year would suggest this should now be increased
to 15-20, although tracking them all is not easy.
Here’s a tip for an enterprising finance journalist: spend a couple of
days crunching the numbers after searching both share registers and try
to come up with a list of the 20 investment bankers who are each worth more than
$110 million thanks to their enterprising and value-creating paper
However, don’t tell Kim Beazley or the nation’s engineering departments.