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Macquarie Group Limited

Capital Notes 5

Morgans is a Joint Lead Manager to the Offer(1)

Macquarie Group Limited (MGL) has announced it is seeking to raise $550 million(2) through the issue of Macquarie Group Capital Notes 5 (MCN5) (MQGPE). MCN5 are fully paid, unsecured, subordinated, non‑cumulative, mandatorily convertible notes.

MCN5 may be suitable for investors looking for regular partially franked(3) income by way of floating rate distributions. MCN5 may offer investors the opportunity to further diversify their income portfolio.

The Offer includes a Reinvestment Offer to all eligible Macquarie Group Capital Notes 2 (MCN2) (ASX: MQGPB) Holders who held MCN2 on the record date Monday, 8 February 2021.

MGL expects to redeem MCN2 for $100 per Note on 17 March 2021 for Holders who do not elect to reinvest in this Offer and still hold MCN2 units on that date (subject to MGL giving a redemption notice and any required regulatory approvals).

MCN5 are a complex investment and may be difficult to understand, even for experienced investors, and involve different risks from a simple debt or ordinary equity security. You should ensure that you understand the MCN5 Terms and risks of investing in MCN5 and consider whether it is an appropriate investment for your particular circumstances. It is important that you read the Replacement Prospectus in full before deciding to invest in MCN5.

Key features of the Offer

  • Opportunity to reinvest MCN2 redemption proceeds ($100 per Note) into MCN5 ($100 per Note) and maintain an exposure to MGL beyond the expected redemption of MCN2 on 17 March 2021 
  • Opportunity to participate in the Broker Firm Offer via Morgans as a Joint Lead Manager to the Offer
  • MCN5 have a face value of $100 and are redeemable by the issuer on 18 September 2027, 18 March 2028 and 18 September 2028(4) 
  • If not redeemed before, MCN5 will convert into ordinary shares on 18 September 2030(5) 
  • Quarterly (partially franked) gross distributions(6) equal to the 3 Month Bank Bill Rate plus a margin of 2.90%(7) i.e. approximately 2.91% p.a(8) 
  • Distributions are discretionary, non-cumulative and subject to the Distribution Payment Conditions outlined in the Replacement Prospectus but must be paid ahead of ordinary share dividends, and if not paid, dividend and capital restrictions apply to ordinary shares 
  • At the issue date, MCN5 will constitute as APRA eligible regulatory capital instruments and contain a Non-Viability Trigger Event which may impact their value in certain circumstances(9) 
  • Expected to be quoted on the ASX under the code MQGPE(10)

Issuer: Macquarie Group Limited (ASX:MGL)

Transaction: Capital Notes Offer

Morgans Role: Joint Lead Manager

Offer Size: $550 million

Offer Opening Date: 23 February 2021

Morgans Broker Firm new applications closing date: 10 March 2021

MCN5 are not deposit liabilities and are not protected accounts of Macquarie Bank Limited (MBL) under the Banking Act 1959 (Cth) (Banking Act) and are not guaranteed or insured by any government, government agency or compensation scheme of Australia or any other jurisdiction. MGL is not an authorised deposit‑taking institution (ADI) for the purposes of the Banking Act and its obligations do not represent deposits or other liabilities of MBL. Investments in the MCN5 are an investment in MGL and will be affected by the ongoing performance, financial position and solvency of MGL. The investment performance of MCN5 is not guaranteed by MGL, MBL or any other member of the Macquarie Group.

There are a number of risks associated with an investment in MCN5, many of which are outside the control of MGL. Before applying for MCN5 all investors should consider whether MCN5 are a suitable investment for them including by considering the key risks as outlined in sections 1.3 and 5 of the Replacement Prospectus. There are also a number of differences between MCN2 and MCN5 outlined in section 3.4 of the Replacement Prospectus which investors should be aware of before deciding to participate in the Reinvestment Offer.

Investors should note that no cooling‑off rights (whether by law or otherwise) apply to an Application for MCN5. This means, that in most circumstances, you cannot withdraw your Application once it has been lodged, except as permitted under the Corporations Act.

Footnotes

  1. Morgans will receive fees for its role. 
  2. MGL may issue more or less than $550 million of MCN5. 
  3. MGL expects, but does not guarantee, that Distributions will be franked. The level of franking may vary over time and Distributions may be partially, fully or not franked. The value and availability of franking credits to investors will depend on the investors particular circumstances and the tax rules that apply at the time of each Distribution. 
  4. Subject to APRA approval. MCN5 are perpetual and do not have a fixed maturity date. If MCN5 are not Converted, Redeemed or Written-Off, they could remain on issue indefinitely and the Issue Price may not be repaid. Due to the Business Day convention, the Scheduled Optional Exchange Dates are deferred from 18 September 2027 to 20 September 2027, and from 18 March 2028 to 20 March 2028. 
  5. Conversion is subject to conversion conditions as outlined in the Replacement Prospectus. 
  6. Distributions are non-cumulative, paid at the discretion of MGL and subject to Distribution Payment Conditions. 
  7. Margin was set via the bookbuild on 19 February 2021.
  8. Based on 3 Month Bank Bill Rate of 0.01%.
  9. Such an event (including serious impairment of MGL’s financial position and insolvency) may result in Conversion or Write-off of MCN5; full detail is contained in the Replacement Prospectus and Morgans Offer Summary. 
  10. Application will be made to list MCN5 on ASX.

More information

Investors should read the Replacement Prospectus in full to understand the features and risks of MCN5. Please contact your Morgans adviser to apply under the Offer.

If you have any questions about the Offer, please contact your Morgans adviser, call 134 226 or find your nearest office.

Download Prospectus

MCN5 are being offered only in Australia and the Prospectus will only constitute an offer to a person receiving it in Australia. Not for distribution, directly or indirectly, in the United States or to, or for the account or benefit of, US Persons, except in accordance with an available exemption from the registration requirements of the US Securities Act. The distribution of the Prospectus (including an electronic copy) in jurisdictions outside Australia may be restricted by law.

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