Macquarie Group Ltd. (MQG), Australia’s biggest investment bank, is expanding its bond and loan arranging business in Asia as sales of so-called dim sum notes surge and high-yielding clients demand access to debt investors.
The bank will add to its existing team of 10, which is split between Hong Kong and Singapore, as transactions grow, according to Stephen Panizza, who has expanded his Asia focused debt advisory role to head the new unit.
“Our clients in Asia are mid-market, high growth businesses which constantly need capital,” Singapore-based Panizza said in a phone interview. “As liquidity returned to the market after the credit crisis, we came to the conclusion we needed to build out a debt capital markets capability to deliver to our clients access to a wider array of capital sources.”
Macquarie, based in Sydney, ranks 139th as an arranger of bond sales in Asia outside of Japan this year, its two transactions giving it a 0.1 percent market share, according to data compiled by Bloomberg. It’s at No. 39 for equity offerings in the region, compared with No. 5 in Australia and New Zealand, the data show.
Yuan-denominated bond sales in Hong Kong may reach 200 billion yuan ($30.9 billion) this year, according to Mizuho Securities Asia Ltd., as Chinese companies seek to circumvent lending curbs on the mainland. Macquarie helped Powerlong Real Estate Holdings Ltd. (1238) sell 750 million yuan of three-year, 11.5 percent notes in March, Bloomberg data show.
“Clearly it would be a huge challenge to break the established order but that’s not our objective,” Panizza said. “Powerlong is a good example. We invested pre-IPO, we did the IPO, then when they wanted to do a debt issue, naturally we were there to help.”
The Chinese developer sold shares in an initial public offering in October 2009 that was managed by Goldman Sachs Group Inc., ICBC International Securities Ltd. and Macquarie Capital Securities Ltd.
Most of the 10 people in the bond and loan unit worked at the bank prior to the team’s official start date of April 1, Panizza said. David Pong, who was previously at Australia & New Zealand Banking Group Ltd. (ANZ), was hired to focus on debt origination last month, he said.
“The pool of liquidity which is most interesting to us in Asia is the dim sum market,” Panizza said. “This is going to be a very deep, very liquid market at some point in the future.”
The expansion of Macquarie’s fixed-income, currencies and commodities business in Asia over the past 12 months was also an “enabling factor,” Panizza said.
“Part of their platform is credit sales and trading,” he said. “That gave us the distribution capability we didn’t have previously.”
The Asia-Pacific region accounted for 8 percent of the bank’s revenue for the year to March 31, versus 12 percent in 2010, Bloomberg data show. Macquarie makes most of its money from its funds management business, according to the bank’s website.