Macquarie Bank's Control Over Sydney Airport: Ownership Explained

Macquarie Group Limited, commonly known as Macquarie Bank, is an Australian multinational investment banking and financial services group. In 2002, Macquarie Bank won a bid for a 99-year lease on Sydney Airport, Australia's largest airport, through a consortium. Macquarie Group's relationship with Sydney Airport ended in 2013 when it offloaded its shares to its shareholders, bringing an end to an 11-year association that delivered the bank millions in fees and dividends.

Macquarie Bank won a 99-year lease for Sydney Airport in 2002

In 2002, Macquarie Bank won a 99-year lease for Sydney Airport, Australia's largest airport by traffic volume. The lease was won through a consortium, Southern Cross Airports Corporation Holdings Limited, which was funded through the IPO of the managed airport fund, Macquarie Airports (MAP). This move was part of the Australian government's decision to privatise the country's airports, specifically Sydney (Kingsford Smith) Airport, which was announced in December 2000.

Prior to privatisation, Sydney Airport Corporation Limited (SACL) was the corporate entity and sole leaseholder for Sydney Airport, incorporated in May 1998 and commencing operations in July of that year. SACL owned the leases for all airports in the Sydney region, including Bankstown, Hoxton Park, and Camden, as a Government Business Enterprise.

The Macquarie Group-led consortium's successful bid for the 99-year lease was valued at A$5.6 billion. This privatisation marked a significant change in global aviation, with airports being sold or leased to private owners or operators. The investment in Sydney Airport over the following two decades exceeded A$3 billion, leading to improved capacity, efficiency, and customer experience.

In 2013, Macquarie Group ended its association with Sydney Airport by offloading its $1.3 billion stake to its shareholders, generating a substantial profit. Despite criticism regarding the airport's avoidance of corporate taxes during Macquarie Bank's ownership, the bank's involvement in the airport's operations resulted in significant improvements and financial gains.

Macquarie Group is an Australian multinational investment banking and financial services group

Macquarie Group, commonly known as Macquarie Bank, is an Australian multinational investment banking and financial services group. It is headquartered in Sydney and is listed on the ASX (ASX: MQG). With more than 871 billion Australian dollars in assets under management, Macquarie is Australia's top-ranked mergers and acquisitions adviser and one of the world's largest infrastructure asset managers. The group was founded on 10 December 1969 as Hill Samuel Australia Limited (HSA), a subsidiary of the UK's Hill Samuel & Co. Limited.

Macquarie Group's customers have an overall net wealth per capita of A$943,000 (as of March 2024), making them among the wealthiest in Australia. The group employs more than 20,000 staff across four operating groups in 34 markets. Its logo is a stylised version of the holey dollar, Australia's first coinage, designed by Governor Macquarie. This logo embodies the group's purpose of empowering people to innovate and invest for a better future.

Macquarie Group has a diverse range of businesses, including Macquarie Asset Management (MAM), which is the world's largest infrastructure asset manager and a top 50 global asset manager. MAM manages over $735.5 billion in assets for investors across multiple asset classes worldwide. Another key business is Banking and Financial Services (BFS), which is Macquarie's technology-driven retail bank. BFS offers personal banking, wealth management, and business banking products and services to approximately 1.7 million clients, advisers, brokers, and business clients.

Macquarie has completed several significant acquisitions over the years, including the purchase of Delaware Investments, a US-based diversified asset management firm, in 2010. This acquisition propelled Macquarie into the top 50 asset managers globally. In 2017, Macquarie's Commodities and Global Markets business expanded its footprint by acquiring Cargill's petroleum business and its North America power and gas business. The group also led the acquisition of the UK Green Investment Bank plc from the UK government in 2017.

In addition to its core businesses and acquisitions, Macquarie Group has had a long-running relationship with Sydney Airport. In 2002, Macquarie Bank won the bid for a 99-year lease on the airport through a consortium. However, in 2013, Macquarie Group ended its association with Sydney Airport by distributing its shares to its shareholders, marking an 11-year tie that delivered the bank substantial fees and dividends.

Macquarie Bank offloaded its $1.3 billion stake in Sydney Airport in 2013

Macquarie Bank's association with Sydney Airport began in 2002 when it won a bid for a 99-year lease on the airport. Macquarie Bank funded this through the IPO of the managed airport fund, Macquarie Airports (MAP), under a combination of trusts. In 2009, Macquarie stopped managing the asset, and in 2011, MAP Airports traded its stakes in Brussels and Copenhagen airports for an 11% stake in Sydney Airport. MAP Airports then renamed itself Sydney Airport Holdings.

In 2013, Macquarie Bank decided to end its 11-year relationship with Sydney Airport by offloading its $1.3 billion stake. The investment bank's shareholders approved a plan to distribute the 340 million shares in Sydney Airport held by Macquarie to its shareholders. Over 99% of shareholders supported the resolution, which was expected to enhance Macquarie's return on equity. Before the vote, Macquarie chairman Kevin McCann urged shareholders to support the plan, stating that it was in their best interest and would reduce the bank's surplus capital.

The handover of shares to Macquarie investors was also seen as tax-efficient, as a sale of the stake would have incurred capital gains tax. By handing the shares over to investors, individual Macquarie shareholders could avoid paying any tax until they decided to exit the investment. This move brought Macquarie a $265 million gain based on its share price at the time.

Following the offloading of Macquarie's stake, Sydney Airport Holdings took a 100% stake in Sydney Airport in 2013 by issuing securities to or buying out minority owners. In 2021, Sydney Airport Holdings agreed to a $23.6 billion takeover bid from the Sydney Aviation Alliance (SAA), a consortium of investment and infrastructure funds. The acquisition was completed in March 2022.

Sydney Airport Holdings took a 100% stake in Sydney Airport in 2013

In 2013, Sydney Airport Holdings took full ownership of Sydney Airport. This was achieved by issuing securities to, or buying out, minority owners of the airport, including various superannuation funds.

Prior to this, in 2002, Macquarie Bank had won the bid for a 99-year lease on the airport through the consortium Southern Cross Airports Corporation Holdings Limited. Macquarie funded this through the IPO of the managed airport fund, Macquarie Airports (MAP), under a combination of trusts. However, in 2009, Macquarie stopped managing the asset, spinning off MAP Airports (MAp), which owned shareholdings in several airports, including an 84.8% stake in Sydney Airport.

In 2011, MAp Airports traded its stakes in Brussels and Copenhagen airports for the Ontario Teachers' Pension Plan's 11% stake in Sydney Airport. Following this, in December 2011, MAp Airports renamed itself Sydney Airport Holdings.

So, by 2013, when Sydney Airport Holdings took a 100% stake in Sydney Airport, it had already owned an 11% stake in the airport since 2011, and had previously owned an 84.8% stake through MAp Airports before spinning it off in 2009.

It is worth noting that, despite the change in ownership structure, the Australian Government still retains responsibility for certain airport-related services through agencies such as Airservices Australia, the Australian Customs Service, and the Australian Federal Police, among others.

Macquarie Bank acted as a financial advisor to the Sydney Aviation Alliance (SAA)

Macquarie Bank, also known as Macquarie Group, acted as a financial advisor to the Sydney Aviation Alliance (SAA) during the acquisition of Sydney Airport. The SAA is a consortium comprising some of the world's largest infrastructure and airport investors, including IFM Investors, Global Infrastructure Partners, QSuper, and AustralianSuper.

Macquarie Bank's role as a financial advisor to the SAA was informed by its deep expertise in the transport infrastructure sector, drawing on extensive prior experience involving airports and listed infrastructure transactions. The bank leveraged its knowledge and relationships to provide strategic M&A advice, assisting the SAA in securing access to due diligence following two earlier offers.

Macquarie Bank's involvement with Sydney Airport dates back to 2002 when it acquired a 99-year lease on the airport through the consortium Southern Cross Airports Corporation Holdings Limited. This was funded through the IPO of the managed airport fund, Macquarie Airports (MAP), under a combination of trusts managed by the bank. Macquarie Bank's management of the asset ended in 2009 when it spun off to form MAp Airports (MAp), which owned shareholdings in several airports, including an 84.8% stake in Sydney Airport.

In 2013, Macquarie Bank decided to offload its cornerstone stake in Sydney Airport, ending an 11-year association that had been lucrative for the bank. The bank's shareholders approved a plan to distribute the shares in Sydney Airport to its own shareholders, with each Macquarie shareholder receiving one share in the airport for each bank share they owned. This move was expected to enhance the bank's return on equity and reduce its surplus capital.

In 2021, Macquarie Capital, the investment banking division of Macquarie Group, once again found itself involved in the acquisition of Sydney Airport, this time as a financial advisor to the SAA. The SAA made a successful takeover bid for Sydney Airport, which was approved by the Australian Competition & Consumer Commission in December 2021, with the acquisition completing in March 2022.

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