Punters want more from state of Origin

If in doubt, buy

July 4, 2008

Steve Burrell, Business Editor, The Sydney Morning Herald

Tick, tick, tick. Securities in Macquarie Group's specialist funds keep rattling around their year-lows, resulting in hundreds of millions of dollars in paper losses for Macquarie Group since its March 31 year end.

Macquarie's investments in both Macquarie Infrastructure Group and Macquarie Airports, as of March 31, have now fallen so far they are below the value Macquarie gave them in its accounts.

The stakes Macquarie held in its two biggest listed funds at its year-end date were worth about $440million (MIG) and $780million (MAP) yesterday.

This compares with the bank's valuation for the businesses of $581million for MIG and $930million for MAP.

Roughly speaking, Macquarie Group has about $300million in paper losses since March 31 on its stakes in the funds, with few signs that adverse investor sentiment about heavily geared infrastructure funds is getting any better.

That said, MAP had a bounce yesterday in a down market, up 14c to $2.27. On Tuesday MAP hit its lowest level in almost three years, $2.03.

MIG was down 5c, to $2.35, yesterday.

As in all things Macquarie, the paper losses are not the whole picture. Its book value in both investments has increased substantially as Macquarie made big investments as the share price dropped.

In MIG its stake is now reported as 15 per cent, up from 8 per cent on March 31. Similarly with MAP, where Macquarie has moved its stake from 20 per cent to 22 per cent in the current financial year.

The ordeal for the funds is reflected in Macquarie Group's share price. It closed at $47.06 yesterday, up 31c but well down from its year-high of $92.88.