Macquarie plans South African joint venture

Australia's biggest investment bank Macquarie plans to launch a new venture in South Africa with local black-owned firm First South Financial Services, the two firms said today.

Macquarie First South will be equally owned by the partners, First South chief executive Duarte da Silva told Reuters.

"The arrangement ... will be formed through the contribution of Macquarie's Africa corporate advisory business and First South's institutional equities broking business," a statement from Macquarie received by Reuters on Monday said.

No financial details of the planned deal was given.

It would focus on investment banking services including stockbroking, equity research, equity capital markets and advisory services for both corporates and project finance, it added.

"Macquarie has a great deal of proprietary knowledge especially in infrastructure and resources... Those two sectors are really where it's at in South Africa for the next 10 years," Da Silva said.

South Africa is the world's biggest producer of gold, platinum and ferrochrome and has launched a massive infrastructure building programme.

The government plans to spend 370 billion rand ($99.7 billion) over three years to improve ageing infrastructure, hoping it will help lift South African economic growth to 6 per cent by 2010 from 4.9 per cent now.

Macquarie Bank Ltd manages two unlisted African infrastructure funds jointly with Old Mutual Asset Managers with combined capital commitments of around A$400 million ($474 million).

The Australian bank, which operates in 23 countries, said in February when it released first-half results that investment banking revenues would be significantly lower in the second half.

First South is a subsidiary of the J&J Group, an investment and management company with holdings in financial services, healthcare, information technology and logistics.

First South, South Africa's largest black-controlled securities firm, will give the joint venture key credentials to bid for government business.

The government's Black Economic Empowerment (BEE) programme seeks to give majority blacks more involvement in the mainstream economy after being excluded during apartheid. Preference for tenders is given to firms with significant black ownership.

The proposed deal is the second international stockbroking joint venture announced recently after Africa's biggest banking group, Standard Bank agreed a deal with Credit Suisse last month.

- REUTERS