MACQUARIE INFRASTRUCTURE AND REAL ASSETS The impact of unbundling – who can invest in what in the future

8 March 2013- Howard Higgins

STRICTLY CONFIDENTIAL 2

Macquarie, The global leader in infrastructure with

€78bn of assets under management

South Africa

N3 Toll Concessions

Bakwena Platinum Corridor

Trans African Concessions

Neotel

Kelvin Power Station

Nigeria

Lekki Concession Company

USA

Dulles Greenway

Indiana Toll Road

Chicago Skyway

Icon Parking

Total Terminals International

Smarte Carte

Penn Terminals

Airport Services (fixed base

operations)

Waste Industries

Global Tower

Partners

Aquarion Company

Broadrock

Renewables

Puget Energy

District Energy

Duquesne Light

The Gas Company

Bulk Liquid Storage

Terminal Business

Canada

Edmonton Ring Road

A-25

AltaLink

Cardinal (power station)

Whitecourt (biomass facility)

Chapais (biomass facility)

Erie Shores Wind Farm

Hydro Power Business

Halterm Limited (port)

Fraser Surrey Docks

UK

M6 Toll

Bristol Airport

Wales & West Utilities

Thames Water

Combined Landfill

Projects Envirogas

Energy Power

Resources

Arqiva

Airwave

Condor Group (ferry

services)

National Car Parks

Wightlink (ferry services)

Belgium

Brussels Airport

Denmark

Copenhagen Airports)

China

Changshu Xinghua Port

Hua Nan Expressway

Taiwan

Miaoli Windpower

France

Autoroutes Paris-

Rhin-Rhône

Trois Sources &

Lomont Windfarms

Compteurs Farnier

(water metering)

EPR France (wind

farm)

RES (wind farm)

Pisto SAS (oil

storage and

distribution)

Germany

Warnow Tunnel

GWE (heat & power)

Techem

(submetering)

Thyssengas

TanQuid (tank

storage business)

Poland

DCT Gdansk (container

terminal)

Spain

Asset Energia Solar

Solpex Energia Solar

Sweden

EPR Sweden (wind farm)

District Heating operation

Arlanda Express

Japan

Hanjin Pacific Corporation (Tokyo,

Osaka)

Australia

Dampier to Bunbury Natural

Gas Pipeline

Multinet Gas Holdings

United Energy Distribution

AlintaGas Networks

Hobart International Airport

United Arab Emirates

Al Ain Industrial City

Industrial City of Abu

Dhabi

ICAD Effluent Treatment

Plant

Represents businesses and assets which Macquarie Infrastructure and Real Assets manages on behalf of investors with various direct percentage stakes held in each.

Mexico

Decarred (highways)

South Korea

Baekyang Tunnel

Cheonan-Nonsan Expressway

Incheon International Airport

Expressway

Gwangju 2nd Beltway Section 1 & 3-1

Machang Bridge

Soojungsan Tunnel

Daegu 4th Beltway East

Incheon Grand Bridge

Seoul Chuncheon Expressway

Woomyunsan Tunnel

Yongin-Seoul Expressway C&M West Sea Power/West Sea Water

Hanjin Pacific Corporation (ports)

Busan New Port Phase 2-3

Seoul Subway Line 9, Section 1

North East Chemical

Roads

Airports

Utilities

Communications

Other Transportation

Other

MIRA manages 95 infrastructure businesses in 23 countries

India

Viom Networks

Adhunik Power and Natural

Resources

MB Power

Czech Republic

CRa

Russia

Brunswick Rail

STRICTLY CONFIDENTIAL

The Infrastructure Investment Challenge

Over the last 18 years $36 trillion was invested globally in infrastructure.

Over the next 18 years OECD estimate the required investment will be $67

trillion (asset investments to GDP ratio of 70%)

This excludes social infrastructure – schools, hospitals & housing, and does not

address backlogs on the renewal of aging assets.

—Constrained public sector budgets

—Balance sheet pressures for most major strategic investors

—Material reduction in the availability of commercial debt

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The Global economies face unprecedented challenges to fund infrastructure investments

So what’s changed?

STRICTLY CONFIDENTIAL

Sources of Infrastructure Funding

Governments are looking to pension funds for the future funding of infrastructure

investment.

The OECD estimate pension funds are holding US $65 trillion of assets

But <5% will be allocated to “alternatives” which includes infrastructure

Very few Pension Funds invest directly. They use fund managers

Competence and origin of the investor continues to be a concern.

Investment capital is mobile and will migrate to geographies where the risk/return balance

is optimised

Green field or investments with high capex requirements are generally unattractive

because of yield requirements

The lack of liquidity is a major concern for many investors.

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Where will the funding come from?

Is European energy infrastructure investment attractive?

STRICTLY CONFIDENTIAL

Conclusions – What can Macquarie invest in?

Overall we see unbundling as a very positive development and we will continue to deploy

capital – assuming we can achieve our target returns

Political and regulatory stability and transparency is a key consideration.

The way the law has been drafted may unintentionally prevent the Macquarie from

investing

The law needs to recognise there is a fundamental difference between the governance

arrangements and strategic intent of a strategic v fund manager

Fund managers are either separate or “ring fenced” within their parent organisations

Fund investments are discrete and don't seek synergies or economies of scale across

assets

Large investments are normally consortium based

Any related party transactions are subject to oversight by investors

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