Investing in Nigerian Infrastructure Networking Function
14 November 2011
Strictly Private and Confidential . Important Information
This document is being provided to targeted institutional investors as a source of preliminary information about NIIF1. It is confidential to the person to whom it is provided and should not be copied or distributed in whole or in part or disclosed without our prior written consent. This document does not constitute an offer to sell or a solicitation of an offer to buy any securities. This document does not contain all the information necessary to fully evaluate any transaction or investment, and you should not rely on the contents of this document. The matters described in this document are subject to discussion and amendment. Any investment decision should be made based solely upon appropriate due diligence and upon receipt and careful review of relevant offering documents. Recipients of this document should neither treat nor rely on the contents of this document as advice relating to legal, taxation or investment matters and are advised to consult their own professional advisers. This document includes forward-looking statements that represent our opinions, expectations, beliefs, intentions, estimates or strategies regarding the future, which may not be realized. Actual and future results and trends could differ materially from those described by such statements due to various factors, including those beyond our ability to control or predict. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Past performance is not a guarantee of future results or returns. Any discussion of past or proposed investment opportunities should not be relied upon as an indication of future deal flow. Targeted returns are not guaranteed. This document includes information obtained from publicly available information and from third party sources considered to be reliable. Whilst this information is provided in good faith, its not, and does not purport to be comprehensive and has not been independently verified. This document is being distributed by African Infrastructure Investment Managers (Pty) Ltd (FSP Licence Number 4307) (AIIM). The Fund is not a registered “collective investment scheme” under the Collective Investment Scheme Control Act, 2002, and nothing in this Document should be construed as constituting offering to “members of the public” an opportunity to invest in a collective investment scheme in South Africa. AIIM is authorised to render financial services to the South African Fund under the Financial Advisory and Intermediary Services Act, 2003.
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STRICTLY CONFIDENTIAL | 1 Welddlcome address Andrew Johnstone CEO – African Infrastructure Investment Managers (“AIIM”)
STRICTLY CONFIDENTIAL | 2 Strictly Private and Confidential STRICTLY CONFIDENTIAL | 3 NiiIfttINigerian Infrastructure Inves tmen t Fund 1
Strictly Private and Confidential . STRICTLY CONFIDENTIAL | 4 Infrastructure: a 20 yyyear story
1990 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Advising third-party clients on privatisations and Acquisition of BAA refinancing acquisitions I-595 South East Acquisition of a – largest ever Project - Water - stake in Brussels Acquisition of airport first PPP of second International Thames Water refinancing US road largest water Airport involving only company availability in the UK Chicago Skyway Takeover of BAA - the largest ppyayment concession - acquisition in the airports sector globally structure Western Sydney first PPP of a Orbital - at the time US interstate Indiana Toll Road concession - the Australia’s largest highway largest privatisation of a toll road in the privately financed US Puget project and largest Energy - urban toll road largest Mitcham-Frankston North Tubelines’ London Project - the largest American Acquisition of Underground contracts urban to ll roa d pro jec t adidvisory ever undertaken in APRR motorway in mandate by Australia France Macquarie Capital to Dampier to Banbury date Sydney Airports Corporation Natural Gas Long term acquisition from Pipeline – Mexico leases for Commonwealth of Australia – the largest gas Adelaide, at the time, world’s largest transmission Advisor on trade sale of an airport line in Australia Middle East Coolangatta & Midlan d Parafield Expressway - MIG’s 40% investment Japan Airports UK’s first in Cintra private toll road United States Korea Acquisition of IPO of Envestra - 40% of NZ Continental Europe Australian gas government- distribution business owned Contact Energy Canada South Africa IPO of Infrastructure IPO of Hills Motorway Trust of Australia - Malaysia / Other Asia Group – Australia’s first Australia’s first listed publicly listed toll road infrastructure investment fund United Kingdom
Note: Represents an illustrative sample of Macquarie Capital transactions
STRICTLY CONFIDENTIAL | 5 Across sectors and gggpeographies
~100 portfolio businesses and ~110 properties1
UK Spain Czech Republic Canada USA Global Tower Partners Japan Bristol Airport Asset Energia Solar Ceske Radiokomunikace AltaLink Chicago Skyway Aquarion Company Airwave Solpex Energia Solar Poland A-25 Dulles Greenway Hanjin Pacific Corporation (Tokyo, Puget Energy AiArqiva Itevelesa Fraser Surrey Docks Indiana Toll Road Osaka) DCT Gdansk (container District Energy CLP Envirogas (vehicle inspections) Halterm Limited (port) AIR-serv (tyre inflation) terminal) Duquesne Light Energy Power Resources Mexico Harley Marine Services TanQuid (tank storage The Gas Company South Korea Thames Water Icon Parking business) Decarred (highways) Broadrock Renewables West Sea Power / West Sea Water Wales & West Utilities Penn Terminals Sweden Mareña Renovables (wind farms) Bulk Liquid Storage Terminal Business Baekyang Tunnel M6 Toll Petermann (school buses) EPR Sweden (wind farm) Waste Industries Cheonan-Nonsan Expressway Condor Group (ferry services) Sentient (private aviation) Varmevarden Daegu 4th Beltway East Moto (motorway services) Smarte Carte Arlanda Express Gwangju 2nd Beltway Section 1 National Car Parks Airport Services (fixed base operations) Russia Gwangju 2nd Beltway Section 3-1 Wightlink (ferry services) Total Terminals International (Hanjin Pacific Corporation) Red Bee Media Brunswick Rail Incheon Grand Bridge Incheon International Airport Expressway Machang Bridge Seoul Chuncheon Expressway Soojungsan Tunnel Belgium Woomyunsan Tunnel Brussels Airport Yongin-Seoul Expressway Denmark Busan New Port Phase 2-3 Hanjin Pacific Corporation (ports) Copenhagen Airports SlSbLi9Sti1Seoul Subway Line 9, Section 1 C&M (cable tv) North East Chemical
France Compteurs Farnier (water metering) EPR France (wind farm) RES (()wind farm) Trois Sources & Lomont Australia Windfarms Hobart International Airport Autoroutes Paris-Rhin- Dampier to Bunbury Natural Gas Pipeline Rhône Multinet Gas Holdings Pisto SAS (oil storage and United Energy Distribution distribution) WA Gas Networks2 Germany 3P Learning GWE (heat & power) Regis Group (aged care) Techem (submetering) Retirement Villages Group Thyssengas China MREEFs Warnow Tunnel MWREF New Zealand TanQuid (tank storage South Africa United Arab Emirates India Puerto Rico (USA) Hua Nan Expressway Metlifecare business) Neotel Al Ain Industrial City Viom Networks Global Tower Partners Changshu Xinghua Port Private Lifecare Kelvin Power Station Industrial City of Abu Dhabi Adhunik Power and Natural Star King (China) Food Group Retirement Care New Zealand Bakwena Platinum Corridor ICAD Effluent Treatment Plant Resources Taiwan N3 Toll Concessions MB Power (Madhya Trans African Concessions Pradesh) Miaoli Windpower Nigeria GMR Airports (Delhi and Hanjin Pacific Corporation (Kaohsiung) Taiwan Broadband Communications Lekki Concession Company Hyderabad airports) Real Estate Airports Communications Utilities Roads Transport & Related Other Services 1. As at 30 June 2011. Represents portfolio businesses which Macquarie Infrastructure and Real Assets manages on behalf of investors with various direct percentage stakes held in each. Above list of portfolio businesses is not exhaustive 2. DUET reached financial close on the divestment of its interest in WA Gas Networks to ATCO Ltd on 29 July 2011 STRICTLY CONFIDENTIAL | 6 Investor support growin g
Over $71 billion committed to Macquarie managgyed infrastructure and real asset funds over 15 years
80 $71 $69 70 $67 $61 60
$51 50 1
40 illion
bb $33
A$ 30 $26
20 $14 $11 10 $7 $4 $2 $2 $3 $0 $1 $1 - 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD 1. Cumulative commitments to MIRA managed funds grouped by Macquarie Group financial years to March. Includes listed, unlisted and hybrid capital raised for MIRA funds and managed accounts. Excludes co-investments STRICTLY CONFIDENTIAL | 7 Core sector investors: Pension Funds
Globally, the largest Pension Funds have embraced infrastructure equity as an attractive asset class Institutional Investor Domicile Total Assets Infrastructure Allocation CalPERS US US$179 billion 0-3% Washington State Investment Board US US$68 billion 5% Texas Teachers’ Retirement System US US$80 billion 3% Alaska Permanent Fund US US$27 billion 3% CalSTRs US US$113 billion 0.5% Illinois State Board of Investment US US$9 billion 5% Midwest Operating Engineers US US$9 billion 5% Ontario Teachers Canada C$87 billion 11% OMERS Canada C$43 billion 20% CPPIB Canada C$106 billion 4% bcIMC Canada C$85 billion ~5% AIMco Canada C$72 billion 2-3% The Future Fund Australia A$58 billion 2-3% AustralianSuper Australia A$29 billion 11% MTAA Australia A$5.5 billion 25% PGGM Europe €72 billion 3% APG Europe €173 billion 2% Hermes Europe £70 billion 1% Approximate US$ equivalent infrastructure allocation1 US$54.80 billion
Source: Preqin, Company Websites, Publicly available articles, Macquarie Research 1. Converted at the applicable US$ exchange rate as at 30 September 2011 STRICTLY CONFIDENTIAL | 8 Shift in asset allocation toward alternatives
100%
90%
80% Equities: Down by 2% 49% 47% 70%
60% Bonds: Down by 7% 50%
40% 33% Cash: Down by 5% 30% 40%
20% Other: Up by 14%
10% 5% 19% 6% 0% 1% 1995 2000 2005 2010 Cash Other Bonds Equity A shift toward alternatives
Source: Towers Watson, Global Pension Assets Study, 2011, Feb 2011, & AIIM STRICTLY CONFIDENTIAL | 9 Why the shift? Sector delivering real returns
Indices of annual cash flows for European infrastructure subsectors compared with weighted average of European CPI, 1986 to 2006 (1986=100)
Source: JPMOrgan, FactSet, Eurostat, OECD, IMF, and company websites
STRICTLY CONFIDENTIAL | 10 Africa is still new
Pensions Assets as % of GDP
160%
140%
120%
100%
80%
60%
40%
20%
0% UK US Brazil Kenya Japan Ghana rlands rmany erland anada Africa Nigeria ustralia Ireland France g Kong ee zz ee hh CC AA G Hon Swit Neth Sout
Source: Adapted from World Bank’s Private Participation in Infrastructure (PPI) database
STRICTLY CONFIDENTIAL | 11 But investment is gggrowing
Infrastructure investment in Africa (USDbn)
Sources: Worldbank PPI databse; PPIAF: “Building Bridges: China’s Growing Role as Infrastructure Financier for Africa”; ICA (2007) McKinsey Global Institute
STRICTLY CONFIDENTIAL | 12 Through dedicated fund structures
Africa focused annual eqqyuity fund raising 2000 - 2010
25 22
20 18
15 13 12 11 10 99 8 7 5.2 5 4 2 1.8 2.2 111.1 090.9 0.1 050.5 0.2 0.4 060.6 0.3 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Aggregate capital (USDbn) Number of Funds
Sources: African Investors, Jan / Feb 2011, - Preqin Research
STRICTLY CONFIDENTIAL | 13 Nigeri a’ s firs t ifttinfrastructure equit y fdfund
STRICTLY CONFIDENTIAL | 14 A need to finance Nigggperia’s infrastructure gap
Nigerian Infrastructure Requirement (US$bn)
US$60bn
US$18-20 US$14bn bn US$8-17bn
Power Rail Roads Oil and Gas
1. March 2011. address by Governor of the CBN: Infrastructure, Industrialisation and the Nigerian economy’
Source: Financing Public Private Partnerships: Conditions, Opportunities and Constraints in Selected African Countries, January 2011 STRICTLY CONFIDENTIAL | 15 Delivery to the Community
Global experience in managing core infrastructure assets that are essential to the community...
Airports Communications
Roads Gas
Rail Water
Ferries Electricity
Ports Employees
…driving best practice and improvement in operating performance across businesses
STRICTLY CONFIDENTIAL | 16