Macquarie AM sale ‘unlikely’ to affect group ratings: Fitch Ratings

US credit ratings agency, Fitch Ratings, has determined that Macquarie Group Limited’s (MGL’s) ratings are “unlikely” to be impacted by the sale of Macquarie Asset Management’s (MAM’s) North American and European public asset management business to Japanese investment bank, Nomura.

The transaction, worth AUD$2.8 billion, is set to be completed by the end of 2025 with the transfer of approximately 30 per cent of MAM’s total assets under management (AUM) as of 30 September 2024 or AUD$285 billion to Nomura.

Fitch Ratings said in a statement that MGL’s “annuity style and stable income sources” will take a hit as a result of the sale, but it will not affect MGL’s Viability Rating (VR) or Issuer Default Ratings (IDR).

“Fitch does not believe it will have a material impact on group earnings over the long term,” the agency said.

“[The transfer] will reduce MGL’s non-interest income but we expect MGL’s earnings to remain the most diversified of the large banking groups in Australia.

“The remaining MAM business will have a focus on private markets globally, while the Australian business will retain its full-service offering, including public investments. MAM’s alternative asset management is unaffected by the announcement.”

Fitch also indicated that MGL’s current ratings are supported by “reasonable buffers”, in the case that the transaction dealings should change.

“The implied VR will remain unchanged even if there is a downward revision of the group’s earnings and profitability or business profile score. The sale is likely to increase MGL’s capital surplus over regulatory minimums, which stood at AUD9.8 billion at 1H25. However, the group has not yet stated its plans for the sale proceeds.”

The agency also confirmed that it does not foresee any impacts of Nomura’s purchase of MAM’s US and European arm on the firm’s ratings, saying that the acquisition is “strategically aligned with its efforts to enhance stable earnings generation”.

“The acquisition aligns with Nomura’s strategy to increase stable, fee-based revenue and expand asset management capabilities. This supports Nomura’s goal of building recurring income to offset volatility in its wholesale business, which has been a weakness in its credit profile,” Fitch Ratings said in a statement.

However, Fitch Ratings issued some caution over Nomura’s “mixed” history with merger and acquisition (M&A) activity.

“Integration is a risk… The transaction may also present challenges related to business integration and financial management until benefits are realised,” the agency said.

“Fitch will monitor the integration of the acquired business and its contribution to Nomura’s profitability targets, particularly as the company works toward achieving its medium-term target of 8%-10% return on equity by 2030, which remains challenging in the current market environment.”