Banking giant poised to go down toll road

Richard Sheppard says building infrastructure is part of Macquarie's established expertise. Picture / Kenny Rodger

The Australian investment bank Macquarie says it is ready to roll on private toll roads in New Zealand if and when the Government decides to go down that path.

"We have had discussions over a long period of time about building private toll roads in New Zealand," said deputy managing director Richard Sheppard.

Ultimately it is a matter for the Government, he said.

"But we would be responsive if the Government went down that direction. It is part of our established expertise and specialty."

Sheppard was in New Zealand last week for a whirlwind tour of the bank's retail and institutional operations in Auckland, Wellington and Christchurch.

Macquarie also has investments in New Zealand property, retirement care and childcare facilities.

"We would say that the whole process of private ownership of infrastructure has resulted in a successful outcome for the community," Sheppard said. "Cities like Sydney now have a network of roads that would not have happened, or would have happened more slowly and less efficiently, if they hadn't been done privately."

Macquarie owns several Sydney toll roads such as the eastern distributor (to and from the airport), the M4 and M5 western roads and the M7 (a new ring road around the west).

As second-in-command, Sheppard has been working closely on Macquarie's high-profile hostile takeover of the London Stock Exchange.

He wasn't able to talk specifics about the $4 billion bid, which is still live, but was nonplussed about the British financial media attention which has tried to paint Macquarie as a bunch of upstart colonials.

"Its just a reflection of the fact that markets have become truly international. We have seen - over a long period - foreign companies buying our assets. This is just part of the globalisation of the world that Australian and New Zealand companies should be seeking to do the same."

The London exchange had a strong market position in one of the world's largest capital markets, he said. It thus fitted the relatively stable and conservative profile of most Macquarie investments.

"The things that we are most focused on are asset classes which have long-term and sustainable cashflows." In those classes there was both a good supply of assets and growing demand for them.

"You would tend not to find us in highly volatile industries with rapidly changing competitive dynamics."

Finding the capital to make big investments has not been a problem.

Since last April the bank has raised about A$6 billion ($6.63 billion) in new equity, about two-thirds of it from international investors.

Macquarie's airport fund has just bought a majority holding in Copenhagen Airport.

Its infrastructure fund is building major toll roads in the United States and France.

Sheppard said the company's global spread was inevitable as it grew in scale. "These are multi-billion transactions. So it's inevitable [our investment in] New Zealand and Australia will be smaller but it's still significant.

"We have occasionally met with scepticism but we've been expanding globally for over a decade now and have a track record of achieving successful returns for the investors in our funds," he said.

"We tend to move slowly and carefully ... We try to stay in areas where we think we have some special value to add and we tend to stick to our knitting in terms of the asset classes we invest in."