MACQUARIE GROUP was trying to raise up to $1.2 billion last night from institutional investors as speculation grew that it was preparing to take write-downs on the value of its key listed satellite funds.
The investment banking group and its advisers were understood to be trying to get a capital raising away at about $30 a share following a sustained rally in its share price over the past four weeks.
Macquarie asked the stock exchange to put the shares in a trading halt after the market closed yesterday. The shares ended the day $1.62 higher at $33.48, and have more than doubled since hitting a low of $15.75 in early March. The trading halt is expected to last until Monday.
The new stock - believed to amount to 40 million shares, equal to just under 15 per cent of issued capital - is understood to have been offered to institutions by Macquarie's advisers, Credit Suisse, at a 10 per cent discount to last night's closing price.
But the exercise is believed to have run into opposition from fund managers who were thought to be open to offers at a significantly lower price - $23 to $25 a share - reflecting of the pricing of Macquarie's international counterparts given the backdrop of the global financial crisis.
Last night's move came on the eve of today's annual profit announcement by the group, which is expected to reveal a sharp drop in earnings from a year ago, snapping a 16-year bull run in earnings.
Macquarie has forecast a halving of net profit from the previous record of $1.8 billion to around $900 million due to higher bad debt charges caused in part by falling asset values.
The group's executives, led by Nicholas Moore, are also expected to see their multi-million dollar remuneration packages made up of short-term cash bonuses and long-term share incentives fall sharply as a result.
Earnings have been ravaged by about $2 billion in write-downs across its listed funds and rising lending losses, although Macquarie is expected to attempt to calm investors again by talking up the strength of its balance sheet.
However, investors fear the write-downs may have seriously eroded the company's capital buffer.
The capital raising comes just eight weeks after the group refuted market speculation about a potential capital raising.
In a statement to the ASX in February, Macquarie said it had no plans to raise capital and that it had $2.9 billion in excess capital above its own minimum requirements at the end of December.
Macquarie was understood to be telling investors last night it required the new capital for "general business purposes" although it is believed it may be taking write-downs on its airport and infrastructure funds.
