Macquarie Group CEO Nicholas Moore and chairman David Clarke steadfastly refused to acknowledge that their model of listed infrastructure funds was a dead parrot at last week’s AGM.

But after the BrisConnections float tanked spectacularly yesterday to close at 59% discount of 41c, just how much more evidence does the Millionaire Factory require before it acknowledges that investors are fed up with excessive fee gouging and borrowing to pay distributions?

Fairfax’s Michael West invoked the dead parrot theme in his feisty column on the BrisConnections flame out yesterday, but I still reckon this video did more justice to the Monty Python sketch.

The business media has a lot to answer for in its coverage leading up to the BrisConnections debut yesterday, so I sent some of them this spray at 2.15pm yesterday to see if it would jolt them into action.

Sadly, it doesn’t seem that anyone has got to the bottom of the question of how various Macquarie vehicles finished up with 26% of Brisconnections, which breaks down in the top 20 shareholders list as follows:

Belike Nominees: 10.72%.

Macquarie Investment Holdings No 2 Pty Ltd: 7.25%

Macquarie Financial Services: 5.27%.

Macquarie Alpha Opportunities Fund: 1.4%

Macquarie Australian Long Short Equities: 1.2%

How much is the bank and how much is third party money? And for Macquarie controlled funds, what was the decision making process when the bank was sweating on a $110 million success fee for getting the float away? These are seemingly rather large conflicts of interest and investors in the Alpha Opportunities Fund have every reason to be up in arms.

Whilst Macquarie’s timing was awful, it should be relieved that NAB’s succession planning announcement stopped the $235 million one day value destruction by Brisconnections yesterday from leading business sections across the country.

The Australian usually takes up every opportunity to beat up Macquarie due to their long-running defamation battle and it didn’t miss this chance, leading today’s business section with “Tunnel float under water in dire times.” Business editor Andrew Main reported a marketwatcher as saying “It’s a complete disaster and it shows it’s quite untrue that there is a big pool of private money looking to come and rescue infrastructure projects.” Main added:

What’s more certain is that Macquarie made a bid for the project, including a $1.17 billion initial public offering, back on May 9 and it has been watching pretty well the whole infrastructure sector turn to custard ever since.

The AFR was more circumspect. Chanticleer had a go but didn’t raise its blood pressure to dangerous levels, and a small item on page 30 noted that the “very ugly debut” reflected “on the group’s model … Yesterday marked — so its rivals hope — a turning point after which institutions are likely to look twice at, if not shun, similar offerings.”

Some institutional investors have criticised The AFR’s soft coverage leading into the float which coincided with the exclusive interview that Nicholas Moore gave to Colleen Ryan for that AFR Magazine cover story last week.

Business Spectator has also been quite polite about BrisConnections, but don’t believe the cynics who reckon that’s because Macquarie is the most prominent advertiser on the site at the moment.

*Disclosure: Macquarie paid $1000 for a group subscription to The Mayne Report earlier this year and the BrisConnections float will probably be discussed on the Business View panel at 9am tomorrow on Sky Business Channel.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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