Macquarie Group (MQG) launches sizable capital raise

Stock

Macquarie (MQG) $123.51 as at 28/08/2019

Event

No shares in Macquarie Group will be changing hands today with the investment bank heading into a trading halt to raise a whopping $1bn in capital. The institutional placement and subsequent Share Purchase Plan for current holders comes as a result of increasing capital requirements from APRA with the company looking to issue an additional 2.5% of the shares currently in the market.

APRA’s additional requirements mostly stem from the banks sizable derivatives trading division and its assessment of counterparty risk on these positions as well as additional need for capital to be held against its annuity style business.

Along with the raise, Macquarie has re-affirmed guidance for their March year end which remains unchanged with “FY20 to be slightly down on FY19.” Consensus is currently placed for Macquarie to have flat earnings over FY20 so the updated guidance falls short of current expectations. Macquarie noted it expects its first half of FY20 to be 10% higher than first half FY19, but lower than the 2nd half of FY19.

Macquarie Group (MQG) Chart

 Macquarie Daily Chart

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