The Millionaires Factory by Chris Wright

Author:Chris Wright
Language: eng
Format: epub
Publisher: Allen & Unwin
Published: 2022-12-29T00:00:00+00:00

Once it was clear that Macquarie was going to survive, attention turned to a problem that had become very clear: nobody really understood what Macquarie actually was.

‘Shareholders knew that we were a company where earnings grew every year. Not all of them fully understood the business,’ Moore says now. ‘When the GFC happened and the share price fell, we needed to explain the business to the investment community, and indeed our own people.’

Macquarie had been a black box. People don’t mind a black box when it’s producing great profits year after year. In a bad year, they wonder what’s inside.

‘In 2008 it was shoot first, ask questions later,’ Moore says. ‘We had to create a very clear narrative about who we were. And that wasn’t at all clear.’

This was evident in some of the efforts to box Macquarie into an obvious comparative description in the boom years. People used to call it the Goldman Sachs of Australia, ‘which was not appropriate given our business mix,’ Moore says, but that was a lot better than the occasional description of being the Lehman Brothers of Australia. Neither was accurate, but Macquarie simply had no natural comparison anywhere in the world, so it was little surprise that when it really mattered, investors found they couldn’t easily get their heads around what it was.

‘So therefore, it was very important to articulate something that was just understandable, and repeatable,’ Moore says. ‘So we had to break our business down into bits that people could understand, and put them into a context people could understand, with a cultural and risk management overlay that people could understand.’

Much of this work would fall to Stuart Green, who was head of investor relations at the time. ‘That was an interesting time,’ he says with crisp understatement. ‘This was a once in a hundred year event.’

In some respects, Macquarie’s interim results announcement for the half-year to 30 September 2008, presented on 18 November, was well-timed, because it allowed the group to demonstrate an important truth that everyone seemed to be forgetting: Macquarie was still profitable. Its profit of A$604 million for the half-year was well down,21 but it was still nowhere near a loss. In fact, it would remain profitable for the whole financial year.

‘The 101 of business is thou shalt be profitable,’ says Nicholas Moore. ‘And we were profitable all the way through. It’s true our profit halved. But in the circumstances, it was understandable and outperformed most of the global industry.’

The interim result also allowed Macquarie to hammer home a few important truths: that it had capital of A$10.3 billion, which was A$3.3 billion more than regulation required; that it had cash and liquid assets of A$26.3 billion, compared to short-term wholesale issued paper outstanding of A$18.9 billion; that it had raised A$7.8 billion of term funding in a year and also that it had a plan to unwind assets to the tune of A$15 billion of initiatives. By this stage it had announced it was selling its

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