By Ross Kelly

The remnants of Macquarie Group’s once-mighty listed funds empire are crumbling fast. And it couldn’t be happening fast enough for some Duet Group investors.

Duet, which owns Australian electricity and gas distribution assets, says it will bring management control in-house at a cost of 93 million Australian dollars (US$98 million) rather than have Macquarie and AMP pulling the strings from outside.

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A pedestrian walks past the logo of Macquarie Group at the company’s headquarters at 1 Martin Place, in Sydney, Australia

Despite the size of the outlay, Duet stapled securities jumped 5% as investors embraced its newly found freedom.

The change leaves European and U.S. toll road owner Macquarie Atlas Roads as Macquarie’s only remaining infrastructure fund listed on the Australian Securities Exchange. The other three are listed in the U.S., London and Asia.

It’s a far cry from the glory days of the mid 2000s, when Macquarie was raking in management and performance fees from a bevy of leveraged Australian-listed satellites including Macquarie Airports, Macquarie Infrastructure Group and Macquarie Communications Infrastructure Group.

While those fees helped boost Macquarie’s coffers, they weren’t looked upon too kindly by the funds’ investors as the financial crisis kicked in, debt became a dirty word, and the shares underperformed the rest of the market. Macquarie stuck by the merits of the model, but started shifting its focus toward unlisted funds amid negative publicity it says had questionable justification.

Duet says internalizing management will “enhance Duet’s corporate governance framework”. It will also chop its annual corporate operating costs in half as base management and performance fees to AMP and Macquarie are eliminated.

“At the heart of this announcement is our focus on creating value for Duet security holders,” Chairman Doug Halley told investors on a conference call.

Gresham Partners advised Duet’s independent directors on the process of bringing management in-house.

AMP and Macquarie have been recently reducing their exposure to Duet, with AMP currently holding about 8% and Macquarie about 5% of its stapled securities.

Neither commented on what they plan to do with their remaining holdings.

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