Sydney Airport set to take off from Macquarie

Investment bank Macquarie Group (ASX: MQG) just released its first-half results, reporting a 39% increase in net profit to $501 million on operating income, which grew 20% to $3.7 billion. The board’s decision to declare a $1 dividend for the half year was also welcome news for shareholders.

The strong profit result was accompanied by the announcement that the investment bank plans to distribute 340 million shares from its cornerstone holding in Sydney Airport (ASX: SYD) directly to shareholders on a one-for-one basis. Macquarie CEO Mr Moore stated that: “Sydney Airport is one of Australia’s premier infrastructure assets. With Macquarie’s strong balance sheet and excess regulatory capital, we believe that it is a good time for Macquarie to distribute Sydney Airport stapled securities to our shareholders, so they can directly participate in its ownership.”

Macquarie’s decision doesn’t come as a complete surprise and will likely please many shareholders. Indeed, the market certainly appeared pleased with Macquarie’s results and update with the share price up 3.7% in early trade against the broader S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO), which was down around 0.3%.

The move by Macquarie to distribute Sydney Airport shares is particularly interesting in the context of current moves by Perpetual (ASX: PPT), which is trying to force Washington H. Soul Pattinson (ASX: SOL) to undertake a similar action with its near 27% holding in TPG Telecom (ASX: TPM) as part of a wider plan to break the cross-shareholding which exists between Soul Patts and Brickworks (ASX: BKW).

Foolish takeaway

Whilst Macquarie’s management shied away from providing detailed guidance in its outlook statement, management did reconfirm that it expects the coming full-year result to be higher than last year’s result. Also, in line with previous years, it expects the second half to be stronger than the first half. For shareholders, growing earnings and capital management initiatives such as an increased dividend pay-out and share distribution bode well for further shareholder value creation.

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Motley Fool contributor Tim McArthur owns shares in Macquarie Group and Perpetual Ltd.

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