Macquarie AM sale ‘unlikely’ to affect group | Australian Markets

US credit scores company, Fitch Ratings, has decided that Macquarie Group Limited’s (MGL’s) scores are “unlikely” to be impacted by the sale of Macquarie Asset Management’s (MAM’s) North American and European public asset management business to Japanese investment bank, Nomura.

The transaction, value AUD$2.8 billion, is set to be accomplished by the top of 2025 with the switch of roughly 30 per cent of MAM’s complete property underneath management (AUM) as of 30 September 2024 or AUD$285 billion to Nomura.

Fitch Ratings stated in a assertion that MGL’s “annuity style and stable income sources” will take a hit as a outcome of the sale, nevertheless it won’t affect MGL’s Viability Rating (VR) or Issuer Default Ratings (IDR).

“Fitch does not believe it will have a material impact on group earnings over the long term,” the company stated.

“[The transfer] will cut back MGL’s non-interest income however we count on MGL’s earnings to stay probably the most diversified of the massive banking teams in Australia.

“The remaining MAM business will have a focus on private markets globally, while the Australian business will retain its full-service offering, including public investments. MAM’s alternative asset management is unaffected by the announcement.”

Fitch additionally indicated that MGL’s present scores are supported by “reasonable buffers”, within the case that the transaction dealings ought to change.

“The implied VR will remain unchanged even if there is a downward revision of the group’s earnings and profitability or business profile score. The sale is likely to increase MGL’s capital surplus over regulatory minimums, which stood at AUD9.8 billion at 1H25. However, the group has not yet stated its plans for the sale proceeds.”

The company additionally confirmed that it doesn’t foresee any impacts of Nomura’s buy of MAM’s US and European arm on the firm’s scores, saying that the acquisition is “strategically aligned with its efforts to enhance stable earnings generation”.

“The acquisition aligns with Nomura’s strategy to increase stable, fee-based revenue and expand asset management capabilities. This supports Nomura’s goal of building recurring income to offset volatility in its wholesale business, which has been a weakness in its credit profile,” Fitch Ratings stated in a assertion.

However, Fitch Ratings issued some warning over Nomura’s “mixed” historical past with merger and acquisition (M&A) exercise.

“Integration is a risk… The transaction may also present challenges related to business integration and financial management until benefits are realised,” the company stated.

“Fitch will monitor the integration of the acquired business and its contribution to Nomura’s profitability targets, particularly as the company works toward achieving its medium-term target of 8%-10% return on equity by 2030, which remains challenging in the current market environment.”