As its shares trade near record levels, investors are trying to figure out where its future growth will come from. A new analysis helps answer that question.
towards the end of July and navigating the mini market heart attack at the start of last month, the stock has surged more than 16 per cent and on Monday, it hit a record high of $228.40.David Rowe
To try to answer this question, Barrenjoey analyst Jonathan Mott has been digging into the megatrends underpinning the group’s growth in recent years: urbanisation , digitisation and green energy.His conclusion? Macquarie doesn’t need to find a new growth bet or latch on to a new megatrend because there is already substantial “embedded revenue upside across the Macquarie empire, via exposures most investors have never heard of”.
Macquarie’s long history as one of the world’s largest managers of traditional infrastructure is well documented. But Mott’s analysis of a staggering 123 deals announced by the group in the past five years – either on its own balance sheet or, more frequently, through its huge Macquarie Asset Management business – shows no reduction in its focus on this part of the market.
Mott says that means earnings from green energy will be back-ended. As equity under management grows over time, base and performance fees get bigger.Forecasting out to 2034 is incredibly difficult.
Another big exposure is via US data centre operator Aligned, into which it is estimated that Macquarie Investment Partners ploughed $US1.3 billion in 2018.Mott’s hope had been to try to put a value on the data centre business, but he is “more comfortable looking at each of these assets with the expectation that there is likely to be substantial valuation uplift since investment.
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