Macquarie quits airport management

SYDNEY: Macquarie Group, Australia's biggest investment bank, agreed to sever management ties with an affiliate that owns airports from Sydney to Brussels as it unwinds a business model that helped to drive 16 years of rising profits.

Macquarie Group will forgo management and performance fees from Macquarie Airports in return for A$345 million of stock in the airport manager, according to a statement. The investment bank's stake in Macquarie Airports will rise to 27.3 per cent from about 21 per cent.

Macquarie Group chief executive Nicholas Moore is distancing the company from its publicly traded funds after an unbroken streak of earnings gains ended last year as it wrote down the value of the so-called "satellite" funds it spawned.

"It's an unravelling of the edifice," said Hugh Dive, who helps to manage US$3 billion at Investors Mutual in Sydney. "Institutions just don't invest in this kind of stuff any more. They realise that the fees were too high and the model is broken. Macquarie is returning to a purer advisory role."

Macquarie Airports said in a statement to the stock exchange that Macquarie Group would receive 150 million new Macquarie Airports shares at A$2.30 each, equating to A$345 million.

- BLOOMBERG