Allan Moss: The quiet Australian who is making a big noise in White City and the Isle of Wight

With airports, motorways and multimedia already under its belt, Macquarie Bank is hungry for more UK assets, its boss tells Sheridan Winn in Sydney
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It's an approach that brought in a 67 per cent increase in profits last year, to A$823m, and has gained Macquarie a market value that recently hit A$14bn. That's not bad for a company which, 20 years ago, was an arm of the now-defunct Hill Samuel. "We started life as the subsidiary of an English merchant bank," concludes Moss. "As we expand in London, there is the sense of coming home."

But while its growth is racing like the hare, Macquarie's strategy is as purposeful and steady as the tortoise. With his quiet, low-key manner, the bank's chief executive, Allan Moss, has steered it through a period of exceptional organic growth - Macquarie has made only one large acquisition in its 35-year history. Moss, who has been in his post since 1993, must rank as one of the world's longest-serving business leaders - a particularly notable achievement in Australia, where a chief executive's shelf life is typically less than three years. He modestly puts this longevity down to Macquarie's team approach.

"We make most of the key decisions together," Moss says. "It's important nobody has a monopoly." The personality aspect of investment banking, he thinks, is often overdone; more important is doing a professional job with every client, every day. "If you do that for 10, 20 years, people start to take notice."

What people have started to notice are the rewards enjoyed by Macquarie people. Moss is the highest-paid executive in Australia, netting A$18m last year, part of a A$90m payout to the seven-strong management team. Locally, Macquarie is known as the "millionaire's factory".

"The resolution to grant this year's tranche of management options was supported by 90 per cent of the votes at the AGM," Moss points out. And next year? "We have a profit-sharing formula that has been in place for 30 years. If we do well, the bonuses will be bigger; if not, they'll be smaller. The approach we take to the remuneration of senior people is no different, in principle, to our approach to the remuneration of other staff."

A university careers talk by Mark Johnson (now Macquarie's deputy chairman) inspired the student Moss to enter the world of investment banking. A Harvard MBA followed and, in 1977, he joined the UK-owned merchant bank Hill Samuel Associates in Sydney. It had 50 employees, including Johnson and Macquarie's current chairman, David Clarke. In 1985, Hill Samuel became part of the newly formed Macquarie Bank, and a year later, Macquarie was listed on the Australian Stock Exchange with a market capitalisation of A$1.3bn. Today, it employs 6,556 people, including 1,747 overseas.

Moss watches staff retention rates closely: the top 20 per cent has a low annual turnover of 5-6 per cent. "The current leadership still remembers what it was like to be part of a small business," he says. "Everyone understands the value of preserving an entrepreneurial culture."

Macquarie's business model is "freedom within boundaries". A small number of key risks - credit, market, operational standards and brand risk (including ethical standards) - are controlled centrally. "Managing key things and delegating as much as we can has encouraged entrepreneurial activity while controlling significant risk," says Moss.

Macquarie's strategy takes an incremental approach, growing by "stepping in to adjacent spaces". Moss says: "It does not involve grand visions. The strength of this approach is you know where you are going. It allows you to control risk. Sometimes you end up down a path you wouldn't have anticipated if you'd tried to look too far ahead."

Moss's intention was always to grow the international business. "We had world-class expertise, and I was confident we could make a broader contribution to markets," he says. Macquarie's interest in infrastructure began in the mid-1990s, with the building of Sydney's M2 motorway: a competitive tender and one of the first by the Australian government. Macquarie came up with the idea of financing it by floating a special-purpose company, as Australia's first listed toll motorway. The company did well, and investors recouped tenfold in the ensuing decade. Macquarie went on to establish its infrastructure group, followed by an airport fund and a communication fund.

The London office opened in 1989 with six people, brokering Australian stocks to UK institutions. Soon after, it moved into financial structuring, and the UK business grew organically from there. Jim Craig, the head of Macquarie Europe, now has 400 staff.

Macquarie's two biggest UK-based businesses are its broad corporate finance advisory (comprising Private Finance Initiative projects, toll roads, airports, telecommunication towers, natural resources and property) and its infrastructure and specialised fund. This is made up of the assets management business, which looks after toll roads like that on the M6 motorway; airports in Brussels, Bristol, Birmingham and Rome; communication towers; the phone directories operation Yellow Brick Road, and the recently acquired BBC Broadcast. Its investments include Wightlink ferries, water and gas companies and Sweden's Arlanda Express. In addition, Macquarie's treasury and commodities division trades futures in metals, agriculture and energy, while Macquarie Securities deals in equities.

"It has been an excellent time for our UK business," says Moss. "We have an outstanding team there. They have bought well and are managing well - that's been recognised by investors around the world." Macquarie's European infrastructure fund now stands at €1.5bn (£1bn), but is the international growth sustainable? "Experience says there are a lot more niches in the world," says Moss. "We have just scratched the surface of what we can do."

Macquarie has managed something almost unique in international investment banking - strong growth and high margins at the same time. Critics say that its high fee structure cannot be sustained, but Moss counters: "Our fees are in line with international norms for private equity. Although some of our funds are listed, the sophisticated investor recognises they are broadly within the private equity space."

Like the Australian cricket team, Macquarie has been at the top of its game. But will both the cricketers and the bankers be able to maintain this?


Born: 1949, Sydney

Education: BA (economics and law), University of Sydney; MBA, Harvard


1977: joined corporate services arm of Hill Samuel Associates (predecessor to Macquarie Bank)

1983: led team responsible for preparing submission to gain an Australian banking licence

1985: operations began under the name Macquarie Bank

1986: head of corporate banking group, Macquarie Bank

1989: deputy managing director

1993: managing director and chief executive

1996: Macquarie Bank listed on the Australian Stock Exchange

2005: appointed an officer in the general division of the Order of Australia