By Paulina Duran
SYDNEY (Reuters) -Australia's Macquarie Group (OTC:MQBKY) said on Thursday first-quarter profit for fiscal 2022 was up significantly from the pandemic-hit period a year earlier, but warned of lower dividends to come as it diverts cash to grow its business.
Chief Executive Shemara Wikramanayake also said during a virtual annual meeting that she regretted the impact on investors from the troubled 2020 IPO by Nuix Ltd, in which Macquarie had a 70% stake at the time. The software vendor has lost over half its value since then.
The country's largest investment bank and fund manager said in its quarterly update that its annual dividend payout ratio would be lowered to between 50% and 70% from a range of 60% to 80% at the end of fiscal 2021.
The decision was driven by its significant capital deployment recently, including A$3.8 billion ($2.80 billion) worth of investments over the past nine months, and its intention to have more "flexibility" given "further opportunities in the coming months", it said.
Its trading update did not provide an earnings number for the first quarter or explicit guidance for fiscal 2022 earnings.
The warning of a lower payout drove Macquarie's shares only 0.5% lower in early trading before they recovered later in the day to stand up 0.37%.
"While a reduction in the target payout ratio would normally bode poorly for an Australian financial, given Macquarie's very strong track record in investing incremental capital at a solid return above its cost of capital, we think the market will be more than comfortable," Goldman Sachs (NYSE:GS) analysts said.
Asked during a separate media call about a recent news report that a consortium led by Macquarie Group was considering an offer for Sydney Airport Holdings, Wikramanayake declined to comment.
Sydney Airport rejected a A$22.26 billion takeover proposal from a group of infrastructure funds earlier this month.
"DEEPLY REGRET" IMPACT FROM NUIX IPO
At the virtual annual meeting, disgruntled investors probed Macquarie about its role in Nuix's controversial IPO, Australia's second-largest of 2020, with some investors saying they only invested in it because Macquarie's name was appended to it.
Macquarie profited greatly from the IPO but the tech company has lost over half its value since listing in December after missing forecasts and has been accused by the corporate regulator of allegedly providing investors with misleading forecasts in its prospectus. Macquarie has a remaining 30% stake in Nuix and is its largest shareholder.
Nuix's former CFO is also being investigated for alleged insider trading.
"We deeply regret the impacts that there have been on investors in Nuix," Wikramanayake said at the virtual meeting, adding the bank had reviewed its IPO processes and had found no faults.
"At the time of the IPO, we all had no reason to believe that the prospectus forecasts would not be achieved. Now, clearly circumstances appear to have changed quickly after listing."
Macquarie was committed to remaining an investor in Nuix, she added. Nuix shares, which listed at A$5.31 per share, were up 1.6% at A$2.54, the largest daily gain in a week.
In its trading update, Macquarie also said its investment banking, asset management and lending businesses had positive outlooks, but last year's windfall from its commodities trading business was unlikely to be repeated this fiscal year.
($1=1.3578 Australian dollars)