Meeting the Needs of Institutional Infrastructure Investors

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THE

POWER OF

DISCIPLINED INVESTING

Meeting The Needs

of Institutional

Infrastructure

Investors

Nov 21st, 2013

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Topics

1. The Context for Private Investment into

Infrastructure

2. How investing serves the needs of

Institutional Funds

3. Making your infrastructure investment

appealing to institutional investors

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1. Context

Institutional

InvestorNeeds

InfrastructureGap

Infrastructure investment needed:

Global: $41 trillion

North America: $6.5 trillion

Europe: $9.1 trillion

South America: $7.4

trillion

Asia: $15.8 trillion

Global environment:

Low interest rates

High equity market volatility

Inflation concerns

Increased correlation in public

markets

Note: Total projected cumulative infrastructure spending 2005-2030Sources: Booz Allen Hamilton, Global Infrastructure Partners, World Energy Outlook, Organisation of Economic Co-operation and Development (OECD), Boeing, Drewry Shipping Consultants, U.S. Department of Transportation

Match

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Global infrastructure fundraising ~ $160 billion to 2011Source: Probitas Partners’ Infrastructure Institutional Investor Trends Survey for 2012

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PIAC infrastructure ExposureSource: PIAC

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Why infrastructure

Sustainable and low volatility cash flows Combination – cash yielding and capital

appreciation

Low correlation to traditional asset classes

Risk mitigation & lower volatility of returns

Essential and long-life assets Strong asset matching of long duration

liabilities

Potential for inflation-linked returns

Provides portfolio level diversification Sector, geographical and strategy

diversification

Potential for absolute returns in a low interest rate environment

Driven by stable, long-term income producing assets

Stable Cash Flows

LowCorrelation

Long-LifeAssets

InflationProtection

Diversity

Returns

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Canadian infrastructure returnsSource: Greystone with data from OTPP, OMERS, CDPQ AND CPPIB

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Historic returns

Source: S&P, DEX, Mercer, Greystone with data from OTPP, OMERS, CDPQ and CPPIB

Ending December 31, 2011

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Infrastructure asset stagesSource: Adapted from Probitas Partners

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Infrastructure asset

Source: Greystone

Stage of development risk return profiles

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Infrastructure asset

Source: Greystone

Sector-based risk return profiles

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A Few Final Considerations

Success in attracting institutional infrastructure

investors is also influenced by other factors such

as:

1. Deal Size: i.e. $100 million deal size for PPP projects.

2. Deal Characteristics: i.e. leverage, governance

arrangements

3. Other Risks: Counterparty risk, political risk, user demand

risk