Macquarie warns of A$900m more in write downs and impairments

Co-investments in its funds and assets continued to drive the bulk of the write downs, which will total A$2bn for its current fiscal year. The firm expects its profit to halve compared with last year's record A$1.8bn result.

Macquarie Group, the largest private manager of infrastructure assets worldwide, is expecting an additional A$900 million (€450 million; $650 million) in write downs and impairment charges in its second half year ending 31 March 2009.

Approximately $700 million of the $900 million in additional write downs and impairments will come from Macquarie's assets under management, co-investments and impairments on trading asset provisions. The rest will come from loan loss provisions.

During its half-year ended 30 September 2008, Macquarie recognised more than A$1.1 billion in write downs and impairments, of which 60 percent were attributable to its strategy of co-investing in its funds and assets, according to an operational briefing.

Macquarie said the bulk of the write-downs represent unrealised losses, indicating that the co-investments it has made in its funds continue to suffer from low asset valuations. Many of its listed funds have been trading below their net asset values throughout last year, though it is unclear how many of its second-half write-down and impairments will come from listed vehicles versus unlisted vehicles.

The firm predicts that profit for its fiscal year ending 31 March 2009 will be approximately $900 million, or about 50 percent of the record A$1.8 billion profit the firm booked the previous year.

Macquarie chief executive officer Nicholas Moore said in a statement the results came amid “exceptionally challenging” market conditions that slowed transaction completion rates and impacted the value of equity investments and loans.

The interim operational briefing also revealed that Macquarie trimmed about 1,000 jobs globally, reducing its headcount from 13,898 at 30 September 2008 to 12,851 at 31 January 2009.