Capital raising scaled back

Macquarie Group has been forced to scale back the size and reduce the price of its capital raising after meeting resistance from institutional investors, a market source says.

When the Sydney investment bank on Thursday indicated it would conduct a capital raising, initial reports suggested it was seeking to raise A$1.2 billion ($1.5 billion) at A$30 a share.

However, by mid-afternoon yesterday market sources were reported as saying the offer would comprise a A$540 million institutional placement at A$27 a share with a further A$200 million to be raised from retail shareholders. Strangely, the Australian newspaper reported that a further A$500 billion in new equity would come from staff's share of retained earnings.

A local market player told the Business Herald yesterday of being offered Macquarie shares at A$27 each and understood the initial institutional offer had been scaled back to A$540 million, having met resistance from institutional investors at the initial price of A$30.

Shares in Macquarie Group, which yesterday reported a 52 per cent plunge in annual net profit, were placed in a trading halt on Thursday which will now remain in place until Monday.

They last traded at A$33.48, which means the reported A$27 a share placement price represents a 19 per cent discount to the market.