November 28, 2023

Investment Banking

Let Your Investment Banking Do The Walking

Barclays tips $75m into Barrenjoey, boosts valuation

In a release, Barrenjoey said it provided further regulatory capital to support the “growth of Barrenjoey’s markets business, including the establishment of its fixed income business and equity financing platforms”.

Barclays chairman of investment banking, Joe McGrath, said the investment underscored its unique partnership with Barrenjoey, which was unlike any other it had in the world.

“We would replicate this endeavour if we could find the best people in the marketplace to associate themselves with us. If that presented itself in other regions, I think we would gladly do it,” he said.

Working in tandem

Mr McGrath said the firm was comfortable running “parallel organisations” in Australia by having a stake in Barrenjoey and a stand-alone Barclays office. He used the Brookfield $17 billion buyout of Ausnet – where Barrenjoey helped advise Brookfield and Barclays provided financing – as an example of how the partnership worked.

“So far, the way it’s worked has been quite good, we’ll figure out ways efficiently work across the organisations in the markets build,” he said.

Barclays’ capital injection follows speculation late last year that Barrenjoey was seeking more funds. However, in February, Barrenjoey chief executive Brian Benari said the group was not seeking more funding or new partners.

“Absolutely not. We’ve got a few people out there who would like to invest in Barrenjoey. We’re capital generative, we have never gone out seeking capital for Barrenjoey … we are in a stronger position than we have ever scheduled,” he told The Australian Financial Review at the time.

“We always planned to have very material levels of excess capital … as a consequence, we have strong capital pools that will see us grow our businesses over coming years.”

On Wednesday morning, Mr Benari said the circumstances had changed.

“What has changed from February is the opportunities we’re seeing coming down the path, and the rate and sign up of new clients and the growth that we can see in those new businesses we expect to come online in the next six months,” Mr Benari said of the fixed income and markets businesses.

He said group now had “multiples” of the regulatory capital it needed to support that growth.

Mr Benari said the firm had not drawn down from Magellan’s $50 million debt facility.

In response to a question about the impact of morale of the pre-money valuation of $750 million, up from the $400 million valuation at which Barrenjoey was established, Mr Benari said employees were focused on building up the business.

“Employees and partners, will be really excited about strengthening the relationship with Barclays. People are here for the long term; this is not about any price point, this is all about how do we accelerate to achieve goals we are setting ourselves,” he said.