Macquarie Group, an Australian-headquartered financial services company, has been named in press reports from Sky News noting that it is in talks with the UK Government regarding a potential £10bn ($13.5bn USD) investment in UK infrastructure. Specifically, the Prime Minister’s Office, 10 Downing Street, has been in negotiations with Macquarie Group’s management for the past few weeks.
Infrastructure Investment – Macquarie Group and UK Government
Macquarie Group’s £10bn investment, according to reports, will be split between existing as well as new infrastructure projects in the sectors of digital and renewable energy. Further, the firm will invest capital from its balance sheet, as well as through the private equity funds it manages.
Balance Sheet
In October 2021, Macquarie Group disclosed a capital raising of A$1.5bn ($1.1bn USD) in the form of an institutional placement and a share purchase plan. This capital raising provides Macquarie Group with the ability to invest in “new opportunities where the expected risk-adjusted returns are attractive”.
Private Equity Funds
Macquarie Asset Management (MAM), an operating division of Macquarie Group, has A$735bn ($530bn USD) of assets under management (AUM) as of September 30, 2021. Through MAM, the firm invests third-party capital in Europe through the following investment vehicles:
- Macquarie European Infrastructure Fund (MEIF), which is currently investing out of its sixth fund
- Macquarie Global Infrastructure Fund (GIF), which is currently investing out of its third fund
Levelling Up Plan
In February 2022, the UK Government unveiled details behind its “levelling up plan that will transform UK”. Indeed, given the timing, Macquarie’s £10bn investment could form part of this levelling up plan, which targets “nationwide gigabit-capable broadband” in the UK by 2030.
Macquarie – UK Digital Infrastructure Investments
In recent years, Macquarie Group has invested over £50bn in the UK’s infrastructure. Within this amount, the firm has made meaningful investments in the sector of digital infrastructure, specifically towards the fiber sub-sector:
KCOM Group
In August 2019, the Macquarie European Infrastructure Fund 6 (MEIF6) acquired KCOM Group, a UK fiber-to-the-premises (FTTP) alternative network operator for £627m. Presently, KCOM passes 250k premises across North Lincolnshire and East Yorkshire in England.
For the year ended March 31, 2021, KCOM generated total revenue of £99.6m ($137m USD) and EBITDA of £31.6m ($43.5m USD). Additionally, as of March 31, 2021, KCOM had property, plant and equipment, at cost (i.e., pre-depreciation), of £410m ($564m USD), which primarily consisted of exchange equipment and external plant.
Voneus Limited
In March 2021, Macquarie Capital’s Infrastructure Principal and Projects business, secured a majority ownership interest in UK rural broadband and fiber provider Voneus.
For the year ended March 31, 2021, Voneus generated revenue of £1.13m ($1.55m USD) and an operating loss of -£5.15m (-$7.1m USD). Additionally, as of March 31, 2021, Voneus had tangible assets, at cost (i.e., pre-depreciation), of £8.8m ($12.1m USD), which primarily consisted of site build.
