Macquarie (ASX:MQG) to earn $1 billion from a company you never heard of

The Macquarie Group Ltd (ASX: MQG) share price sunk more than 5.6% this week after it downgraded its outlook.

But analysts are still bullish on the stock because of a looming payday.

The investment bank owns a substantial part of an Australian unicorn. And that technology company is headed towards an initial public offering in the coming months.

Nuix has been doing massive work

Nuix is a provider of analytics software for cybersecurity, compliance and fraud risks. Its star product is a piece of unstructured data processing software called the Nuix Engine.

The company was founded in Sydney while the city was busy hosting the Olympics in the year 2000. After quietly and steadily picking up government and private clients, it started to come into the public consciousness in the 2010s.

For example, Nuix’s software played a major part in the secret analysis of The Panama Papers. 

The International Consortium of Investigative Journalists (ICIJ) reportedly processed 11.5 million documents, which in 2016 resulted in the exposure of fraud and tax avoidance on a global scale.

How much of Nuix does Macquarie own?

The software firm really started to catch the eye of big-name investors towards the end of the 2000s.

The company has reportedly been self-funding since 2008. Macquarie made its investment in 2011.

Nine estimates the investment bank put in about $100 million to $150 million.

After a top-up to support an acquisition in 2018, Macquarie’s ownership stands at around 70%.

How much does Macquarie stand to earn from Nuix?

Nuix is working on an IPO to be executed in the coming months.

While no prospectus is out yet, the software provider is expected to be valued at around $1.5 billion when it lists on the ASX.

That would make Macquarie’s stake more than $1 billion.

Nuix chief executive Rod Vawdrey has been reporting to potential investors revenue of $176 million for the 2020 financial year.

Based on a valuation of 10 times future revenue, Nuix would be conservatively valued at $1.76 billion.

Market darling Afterpay Ltd (ASX: APT)’s market capitalisation is currently at about 23 times its forecast 2021 revenue.

So even at conservative valuations, Macquarie is set to see its share in Nuix multiply ten-fold when Nuix goes public.

Not a bad investment by the Millionaires’ Factory.

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Motley Fool contributor Tony Yoo owns shares of AFTERPAY T FPO and Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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