Macquarie writes down Brook Asset Management by $16.3 mln

Macquarie writes down Brook Asset Management by $16.3 mln

By Paul McBeth

July 11 (BusinessDesk) –Macquarie Group, the Australian investment bank, has taken a $16.3 million charge to write down the value of its Brook Asset Management unit after the fund manager’s fees dried up last year.

Macquarie Group New Zealand Ltd., the holding company for the bank’s local investment businesses, made a loss of $17.2 million in the 12 months ended March 31, compared to a loss of $730,000 a year earlier, according to financial statements lodged with the Companies Office.

The bulk of that came from a $12.5 million write-down in Brook Asset’s goodwill and $3.8 million of management rights relating to the business.

The write-down “arose from a reduction in funds under management during the year,” the company said in a note entitled ‘intangible assets’. Macquarie didn’t respond to BusinessDesk inquiries.

The Macquarie unit’s net fees and commission income slumped 40% to $11.9 million, with Brook Asset’s net fees tumbling by almost two-thirds to $3.4 million. The subsidiary fund manager made a loss of almost $210,000 in the same period, compared to a profit of $3 million a year earlier.

Brook Asset had a tough start to its latest financial year when research house Morningstar recommended in May 2010 that investors ‘avoid’ two of its funds. The rating downgrade came after Brook Asset co-founder Paul Glass poached his old investment team for his new Devon Funds Management.

The stoush over the staff resulted in Macquarie filing a suit against Devon Funds, and while the first day in court has been had behind closed doors, a resolution isn’t expected until next year.

Macquarie reported a $370,000 contingent liability on Brook Asset for the 2011 year, down from $600,000 a year earlier.

Macquarie bought a 49% stake in Brook Asset in 2004, taking full ownership in 2008. In February 2009, the fund manager lost its mandate with the New Zealand Superannuation Fund.

The investment bank is also looking to divest its stake in troubled infrastructure fund Equity Partners Infrastructure Company No. 1 Ltd. (EPIC), the statements show. Macquarie’s $3.6 million holding in the EPIC fund are logged as ‘available-for-sale’ for a second year in a row.

EPIC was facing a default on its facility with National Australia Bank, and today got a lifeline after Pyne Gould Corp., which owns the fund’s manager, took a $14 million stake in the loan to help the orderly sale of the fund’s assets.

Macquarie’s local advisory businesses didn’t fare too much better, with holding company Macquarie Group Holdings New Zealand Ltd., reporting a loss of $5.4 million in the 12 months ended March 31, up from a loss of $1.2 million a year earlier, according to separate statements. Net fees and commission income fell 38% to $7.7 million.

(BusinessDesk)

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