Final thoughts on Macquarie

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Can you elaborate why you'd be leaving your BB for Macquarie?

I interviewed with them last year, was not very impressed by the people that I met, and chose a MM bank.

and a growing company

Life at Mac is far better than anything in BB. Hours are much better, there is little bs and no face time. Yes, you will get to use the ping pong table.

However, that being said if your reasons for moving are solely "higher base and a growing company", I'd do a little more diligence. Higher base does not translate into higher comp. And, I'd argue Macquarie WAS a growing company. Now, their core infrastructure and principal investing business is scrambling to change directions in the current environment and the hope internally is to grow through 3rd-party advisory. Now you tell me whether you wanna be creating pitch books for Macquarie or a BB.

From what I've heard from people who work there, Macquarie is a highly reputable firm and is known for giving its junior people much more responsibility and in depth training than at any of the BB firms. An analyst at Macquarie, if capable enough, can become as equally qualified, if not more qualified in one year than an analyst at a BB can in three since the scope and depth of work is much greater. Most of your time is spent on financial modeling and other aspects of the investment process and almost none is spent on pitch books.

"Higher base does not translate into higher comp."

Are you implying lower bonuses?

Again, this is what it USED to be like when Macquarie was basically a principal investing shop. This no longer is the case as I noted above.

Yes, that's exactly what I'm implying. Mac traditionally hasn't followed the Street's comp range. In good years they won't hesitate to pay above street and in bad years they won't hesitate to pay below.

The US office are growing if by growth you mean headcount. However they've struggled to increase the size of funds available to invest and advisory fees from working for these funds is where Macquarie generates the vast majority of its revenue in the US. Same amount of money, double the people. You can easily do the math.

However, if you don't think your BB is going anywhere in the near future either than I would definitly move to Mac. Take the guaranteed higher base and the better life.

given that i actually work at macquarie, i can tell you first hand that you are wrong and i am right. The lions share of what we do here is principal investing. Macquarie has diversified its business model into other areas recently which has greatly augmented the strenght of the business. It has done extremely well compared to its peers in the U.S. market and people from all of the BB's and some PE firms have been coming in.

When the new head of NA came in, he told everyone that the new focus for growth would be into third party advisory. Also, as the various funds aren't having the easiest times at the current moment raising additional dough for new stuff, many projects are being left on the vine.

Some groups are still doing "principal" (advisory work for captive funds), but many others are just trying to find equity for any deal they have, or pitching for advisory mandates. Mac is also trying to grow its ECM practice from scratch.

I do however agree with you on the "giving its junior people much more responsibility," the training (unless you mean on the job and not formal) is pretty much a joke compared to the street if you haven't already been an analyst.

If you want a better life, guaranteed base, and less pitching, go with Mac. If you work for a quality IB and still want to do classic PE (as in a banking lifestyle where you get paid more), stick around for another year or two and wait for the markets to improve.

First you "heard from people who work there" and now you "work there"?!? Either that's the quickest interview- to-offer timeframe ever or Mac's HR really have a lot of time on their hands. At least try not to sound like the campus recruiting brochure.

I work for Macquarie in Asia and over here we ARE the bulge bracket right now. Other than UBS and GS in certain markets, we are pretty much tops when it comes to big deals in Asia. We are still hiring and my office of 10 has grown to 25 in the last 3 months with seniors execs from ML, GS, JPM, BoA.

But yeah, principal investing is not so much the craze right now, given all the concerns on the need to shore up the balance sheet.

As some one who decided to move back to Asia after a stint with GS in London, I can assure you that things will be very very different in term of structure and responsibilites. The training is an absolute joke, but that is pretty much part of the Macquarie "culture". No one really indocrinates you into a certain way of doing things or tells you how things should be done the "Macquarie way". You pretty much run your own show.

While this may sound cool, it will be a little more than scary for anyone who jumps in here from a rigid US BB environment with all its heirarchies and rules. The money will more or less be above market but to me the real killer point was the speed with which you can move up. I have met 30-31 year old MDs (called EDs here) and almost all VPs are sub 30.

Think about how comfortable you are in running around in an unstructured environment. But should you choose to join, you won't have too many regrets later. Hey there is something to be said for over 15 years of non stop growth and zero layoffs in this market!

Does anyone know where ED ranks at Mac Cap? My former boss at Bear (senior MD) just landed at Mac as an ED. Also, he did ER at Bear, does Mac also have ER?

Mac titles work as follows:
ED=Executive Director=Senior MD
DD=Division Director=MD
AD=Associate Director=Senior VP
Senior Manager=VP
Manager=Senior Associate
Executive=Associate
Analyst

And yes, they have ER at Mac

Congratulations on your office of 25 ppl doing so well. But you better be doing well enough to feed the hundreds of bankers in the U.S., Canada and Europe because they're not doing any deals right now which means no money come bonus time.

And how can you say Barbara isn't all that wrong when you contradicted everything she said about Mac still being primarily a principal investing shop?!?

Oh, and there have been layoffs. Nothing big but certainly not zero.

Err..Condolences on all your down time mate, don't worry though we should manage to keep the kitchen fires burning in your houses.

I did say pricipal investing is not much of a craze, but fact remains an average banker in Macquarie still spends a lot more time doing principal deals and related work over classic ECM/M&A. It's not like 2007, but it's still a pretty significant part of the current work and pipeline.

I don't recall having heard of any layoffs anywhere across the board. Can't seem to find any related news on google, so I am gonna have to stick to zero layoffs. Unless of course you are mixing up layoffs with performance related cuts.

with the rest of the financial firms, but there seems to be heavy doubt about the sustainability of the "Macquarie Model".

Another Australian investment bank is trading under $1! How low will Macquarie go? Safer or riskier than a U.S. based BB?

Will Macquarie pay bonuses this year???

I'm sorry, but I am curious as to which Asian market you are talking about, because it sure is not Hong Kong or Singapore.

I do know the headcount numbers in the Singapore office are growing at an exponentional rate with no layoffs before. But headcount does not translate into being THE BB.

Sure in Australia you guys are no.1 with UBS, no argument there, but in rest of Asia? I do not remember seeing any major deals or strong specific presence in any of the traditional emerging South-East Asian economies like Indonesia and Vietnam, or even China/HK.

Macquarie definitely has a large presence in Asia...everyone knows who they are

My question echos mick's concerns. Is Macquarie healthy? Though debt is increasingly hard to get, shouldn't infrastructure investments be attractive to investors right now?

Where do they rank?

There's a report saying that Macquarie would have to refinance some AUD5 Bn debt by end of this year, and its share price dropped some 20% today.

Anyone to shed some light on this?

That report popped up in The Australian newspaper. As per Macquarie's response to the article lodged with the ASX:

"A report in today’s Australian newspaper which claimed that Macquarie Group needs to refinance $A45 billion of debt and that $A5 billion requiring refinancing by March 2009 “could prove difficult to get away” is false and inconsistent with information provided to the market by the Group.

The author did not provide the Group with an opportunity to respond to these claims."

S&P came out and re-affirmed the Group's ratings, but lowered their outlook to negative due to the markets.

"Macquarie Group Limited today noted that Standard and Poor’s (S&P) had reaffirmed its ratings for the Macquarie group of companies: ‘A’ long-term and ‘A-1’ shortterm issuer credit ratings on Macquarie Bank Limited, and ‘A-’ long-term and ‘A-2’ short-term issuer credit ratings on Macquarie Group Limited, Macquarie Financial Holdings Limited, and Macquarie International Finance Limited.

The Group also advised that it had an exposure to Lehman Brothers group of $A21 million and $A33 million to American International Group which separately and combined are not material."

Massive over-reaction in relation to the US investment bank problems, with the 20% fall today mirroring what was seen with Goldies and Morgans overnight.

We'll be OK, providing we don't get shorted or sold out of the market in the next month (down 17.8% to $27.89 as I type this).

Short sellers are driving the shares down

The piece in the Australian doesn't seem very credible: http://www.crikey.com.au/Business/20080918-Macquarie-plunges-as-Ruperts-...

Also: http://www.businessspectator.com.au/bs.nsf/Article/Macquaries-unseen-ene...

Mac is just following the international IB's, and the shorts are trying to put on additional pressure.

By the way, Mac is still very much focussed on principal in North America. The difference is with the new head of North America comes an ambition to deliberately set up a niche advisory and ECM business. Previously, there was none. Now there will be some.

No lay offs, still hiring strongly.

They rank between Associate and VP. Seriously though, you have to remember that Mac's got somewhat inflated titles. If you joined them straight out of undergrad, you'd be a Senior Associate after only 4 years (2 as analyst, 2 as associate).

However, what you actually do is based on your abilities. I've seen Senior Associates do anything from bitch work to practically leading deals.

But the concern/perception of Mac is that they over lever and over pay for all their assets. Infrastructure, conceptually, provides steady cashflows. But when you take those cashflows and lever it to the max (sometimes over and beyond what near-term cashflows can even support) even slight deterioration to performance can cause stresses to the investment.

This is why Mac's getting hammered. People get the investment thesis of infrastructure, but they don't get the complicated way Mac structures these investments. And lack of transparency has been getting punished in this market.

Mac is delusional if they think they'll remain a major player in the principal investing game in North America. Fortunately, the management isn't stupid which is why they are expanding into advisory and ECM. However, seems as though many of the rank and file have yet to come to grips with reality.

Mac's traditional source of funds, its listed vehicles, are dead in water. It will be years, if ever, before these listed vehicles can raise funds again through the public markets.

So, where does the money come for principal investing?

Major player? Nah, just a major part of their North American business - which is small. ECM and advisory is only really there to provide bulk to the principal ambitions.

Listed funds? The percentage of mac funds that are listed is very low. For the last 2 years, barring the odd one or two, all funds have been unlisted equity - which have been performing well. Unlisted equity has been relatively easy to raise.

Principal money is good old fashioned equity. Remember that stuff? Quaint, I know...

The thing people don't get about Macquarie is that they aren't just a small Wall Street bank. They are closer to a hedge fund/PE hybrid with a bank stapled on to the side. No real trading or structuring side to speak of.