Mkif to Invest in Busan New Port the 2Nd Rear Road Project

Macquarie Korea Infrastructure Fund

18th Floor, Unit A, Centropolis Telephone +822 3705 8500 26, Ujeongguk-ro, Jongno-gu Fax +822 3705 8596 Seoul 03161 Internet www.macquarie.com/mkif KOREA

24 September 2020

MACQUARIE KOREA INFRASTRUCTURE FUND MKIF TO INVEST IN BUSAN NEW PORT THE 2ND REAR ROAD PROJECT

Macquarie Korea Infrastructure Fund (“MKIF”) today committed to invest a total of KRW 110.7 billion to acquire 47.6% of equity and 81.0% of subordinated loan interests in Busan New Port the 2nd Rear Road Co., Ltd. (the “Concessionaire”), the concessionaire of Busan New Port the 2nd Rear Road Project (the “Project”) (the “Investment”). To consummate the Investment, MKIF signed Share Purchase Agreement and Subordinated Loan Principal & Interest Purchase Agreement with the existing financial investor, and Shareholders’ Agreement and Intercreditor Agreement with the other shareholders and lenders, respectively.

The Project is a build-transfer-operate (“BTO”) type concession granted by the Ministry of Land, Infrastructure and Transport (“MOLIT”) to the Concessionaire to build and operate the target asset, Busan New Port the 2nd Rear Road (“BNP SRR”). In accordance with the BTO scheme, (i) the Concessionaire provides part of the project cost to construct BNP SRR; (ii) the ownership of the asset is transferred to MOLIT upon construction completion; (iii) and the Concessionaire operates the asset for 30 years (31 January 2017 ~ 12 January 2047) pursuant to the Concession Agreement signed with MOLIT on 31 October 2008 to recoup original investment and earn investment return.

BNP SRR is a dual two-lane, 15.3km long expressway that links Busan New Port Hinterland Complex located in Changwon-si, Gyeongsangnam-do and Jillye Junction on Namehae Expressway located in Gimhae-si, Gyeongsangnam-do. BNP SRR is one of the two main roads that connect Busan New Port and major cities of Korea. And compared to its competing road, BNP SRR is predicted 1 to provide reductions in travel distance and time of ~18.3km and ~34 minutes, respectively, to drivers who travel to/from Busan New Port to the Seoul Metropolitan area, Chungcheong-do or Jeolla-do. The compound annual traffic growth rate of BNP SRR was 49% during the initial ramp-up period from the operation commencement in 2017 to 2019, and traffic volume is continuing to rise in 2020 despite the Covid-19 outbreak in Korea.

The Concessionaire has secured an investment of KRW 462.6 billion 2 in aggregate from 2 financial investors (“FI”s), 9 construction investors (“CI”s) and senior loan lenders to pursue the Project (the “Project Investment”). The Project Investment is comprised of KRW 87.2 billion of equity, KRW 85.5 billion of subordinated loan and KRW 289.9 billion of senior loan. MKIF targets to acquire 47.6% of equity and 81.0% of subordinated loan interests for KRW 41.5 billion and KRW 69.2 billion, respectively, using its available cash and revolving credit facility 3. The drawdown for the Investment is anticipated at the end of September 2020.

1. Source: public release by MOLIT on 10 January 2017; distance and time are based on a travel between Busan New Port Hinterland Complex (Ungdong District) and Jillye Junction on Namhae Expressway 2. Excludes the loans provided by CIs 3. MKIF has KRW 6.4bn of available cash and KRW 139.9bn of unused revolving credit facility balance on the disclosure date

WS:MSIM_Seoul:1482809:v1

Macquarie Korea Infrastructure Fund

If the cash yield 4 of FIs falls below 4.2% p.a. (the “Minimum Guarantee Cash Yield”) during the operation period, CIs agreed to provide cash deficiency support up to KRW 55.0 billion in the form of loan facility (the “CI CDS Loan 5”) to the Concessionaire to guarantee FIs’ return up to the Minimum Guarantee Cash Yield. In addition, if specific conditions 6 are met during the operation period, FIs have an option to obligate CIs to complete the refinancing necessary to fully redeem FIs’ equity capital and subordinated loan principal (together the “Investment Principal”). If FIs exercise such option, they are compensated for the Investment Principal plus an amount that satisfies the Minimum Guarantee Cash Yield (or a higher return depending on the exercise timing) until the day FIs receive the Investment Principal. Accordingly, MKIF has secured an option to receive its Investment Principal plus a return equal to or above the Minimum Guarantee Cash Yield even in case the operating performance of the Concessionaire does not fully meet MKIF’s expectation.

Project Summary

Details MKIF Impact

Equity KRW 87.2bn  MKIF to invest KRW 41.5bn (47.6%) FIs: 58.8%  MKIF has the right to - MKIF: 47.6% appoint CEO during the - Other FI: 11.2% operation period CIs: 41.2% - Lotte E&C Co., Ltd.: 12.2% - Other CIs 7: 29.0% Senior Loan KRW 289.9bn

Tranche A: KRW 250.0bn Interest rate: 3.1% p.a. Term: 23 years Tranche B: KRW 39.9bn Interest rate: 3-year, AA- unsecured corporate bond rate 8 + 0.85% p.a. Term: 23 years Subordinated KRW 85.5bn  MKIF to invest KRW Loan 69.2bn to acquire 81.0% Interest rate: 10% p.a. of subordinated loan Term: 26 years principal (worth KRW 69.2bn) and existing interest (worth KRW 22.3bn) Concession 30 years from the operation commencement date  13 January 2017 ~ Term 12 January 2047 Toll Fare KRW 1,900 per vehicle  Type 2 (small vehicle, mini truck) toll fare based on the entire road MOLIT Termination payment upon early termination of the  Pursuant to the Obligation Concession Concession Agreement

4. Cash yield = (Interest & dividends paid in cash + other cash income) / (simple average of the sum of (i) subordinated loan principal and (ii) FIs’ equity capital for the last two quarters) 5. If the CI CDS Loan is fully used, CIs have an obligation to provide an alternative support to guarantee the Minimum Guarantee Cash Yield to FIs 6. During the operating period, (i) actual revenue of the Concessionaire falls below 85% of the forecast revenue projected by the senior loan lenders for two consecutive years at year-end and (ii) if 80% or more of the CI CDS Loan is used 7. Doosan E&C Co., Ltd. 5.2%, Ssangyong E&C Co., Ltd. 4.7%, POSCO E&C Co., Ltd. 4.7%, Hanwha E&C Corp. 4.1%, Halla Corp. 4.1%, Dongwon Construction Industries Co., Ltd. 2.7%, DSME Construction Co., Ltd. 2.7%, Bando E&C Co., Ltd. 0.8% 8. 2.228% on 22 September 2020

Macquarie Korea Infrastructure Fund

CIs Obligation - If the cash yield4 of FIs falls below the Minimum  Pursuant to Guarantee Cash Yield during the operation period, CIs Shareholders’ are obligated to provide the CI CDS Loan5 to the Agreement, Intercreditor Concessionaire Agreement, CIs’ - If specific conditions6 are met during the operation period, Agreement and CI CDS FIs have an option to obligate CIs to complete the Loan Agreement refinancing necessary to fully redeem FIs’ Investment  CI CDS Loan is repaid Principal after (i) senior and subordinated loans are - If actual operating costs exceed the forecast operating fully serviced (principals costs under the Concession Agreement, CIs are obligated and interests) and (ii) to either reimburse the excess cost to the Concessionaire equity capital is fully or provide alternative operational services on a joint basis repaid to shareholders - If the termination payment received due to fault of the Concessionaire is insufficient to fully repay FIs’ equity capital and principal & interest of the subordinated loan, CIs are to provide a joint guarantee on the shortfall

The Investment is expected to bring the following impacts 9 to MKIF:  Improvement in MKIF’s total shareholder return and distributable earnings  Diversification of the source of income and risk for the fund  Increase in the weighted average operating life of the portfolio by ~1 year 10

MKIF Portfolio10 Asset Class (no. of assets) Pre-Investment Post-Investment Toll Road (11  12) KRW 1,362.3bn (79.9%) KRW 1,473.0bn (81.1%) Port (1) KRW 259.4bn (15.2%) KRW 259.4bn (14.3%) Rail (1) KRW 82.7bn (4.9%) KRW 82.7bn (4.6%) Total (13  14) KRW 1,704.4bn (100%) KRW 1,815.1bn (100%)

9. Actual may be different from expectation 10. On an investment amount basis on 30 June 2020; full deployment of the Investment assumed

Macquarie Korea Infrastructure Fund

For further information, please contact:

Jinwook Park Kevin You Division Director Manager Macquarie Korea Asset Management Co., Ltd. Macquarie Korea Asset Management Co., Ltd. + 82 2 3705 8516 + 82 2 3705 8565 [email protected] [email protected]

This release is not an offer or solicitation for sale of the securities of Macquarie Korea Infrastructure Fund (‘MKIF’) in the United States or in any jurisdiction where any offer, sale or solicitation in respect of such securities is not permitted. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933 and the US Investment Company Act of 1940, as amended (the “Act”), or in any jurisdiction where such offer or sale is not permitted. The securities of MKIF has not been registered under the Act, and may not be offered or sold in the United States absent registration or exemption from registration under the Act. There will be no public offer of the securities in the United States. Not for distribution in the United States or in any jurisdiction where any offer, sale or solicitation in respect of the contemplated securities is not permitted.

This release does not take into account the investment objectives, financial situation and particular needs of the investor. Before making an investment in MKIF, the investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary.

MKIF or Macquarie Korea Asset Management Co., Ltd.(MKAM) is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of this entity do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities.

Investments in MKIF are subject to investment risk, including possible delays in repayment or loss of income and/or capital investment. Neither MKIF, nor any member of the Macquarie Group companies, including MKAM, guarantees the performance of MKIF, the repayment of capital or the payment of a particular rate of return on MKIF securities. Appendix

Investment Highlights 1

Project Overview 2

Project Structure 3

Project Participants 4

Competitive Analysis 5

Traffic Demand Overview 6 Investment Highlights

To invest in Busan New Port the Competitive transportation Positive impacts to MKIF 1 2nd Rear Road Project 2 means to/from Busan New Port 3 expected5

 Busan New Port the 2nd Rear Road  One of two main roads to/from  Improvement in distributable Project Busan New Port earnings – A concession project to operate & manage – Compared to its competing road, BNP SRR – Improvement in MKIF’s distributable a 15.3km Busan New Port the 2nd Rear is predicted3 to provide travel distance and earnings expected due to income Road (“BNP SRR”) that links Busan New time reductions of 18.3km and 34 minutes generated from the Investment Port Hinterland Complex and Jillye Junction to travelers to/from Busan New Port – Secured various contractual provisions6 on Namhae Expressway – Compound annual traffic growth rate of from construction investors (“CI”s) to – Competent Authority: the Ministry of Land, 49% during initial ramp-up period from the protect MKIF against possible risks Infrastructure and Transport (“MOLIT”) operation commencement in 2017 to 2019 associated with the Project Concessionaire: Busan New Port the 2nd Rear Road Co.,. Ltd. (“BNP SRRC”)  Potential increase in traffic demand  Return enhancement – Operation: 30 years (2017 ~ 2047) – Current traffic demand mostly comes from – Enhancement of MKIF’s total shareholder Busan New Port (1-1 ~ 2-3), Busan New return anticipated following the Investment  MKIF to invest KRW 110.7bn Port Hinterland Complex and adjacent residential & commercial complexes – To acquire 47.6% of equity (KRW 41.5bn)  Extension of the operating life of and 81.0% of subordinated loan (KRW – Potential for increase in traffic demand MKIF portfolio by ~1 year1 69.2bn) interests in the Concessionaire exists based on the development4 of Busan – The Investment will extend the weighted New Port 2-4 ~ 2-6, Busan Second New – Investment is ~6%1 of MKIF portfolio average operating life of MKIF portfolio by Port and additional industrial complexes ~1 year to 17.2 years1 – To be funded with MKIF’s available cash near the region and unused revolving credit facility2

1. On an investment amount basis on 30 June 2020; full deployment of the Investment assumed 2. MKIF has KRW 6.4bn of available cash and KRW 139.9bn of unused revolving credit facility balance on the disclosure date 3. Source: public release by MOLIT on 10 January 2017; distance and time are based on a travel between Busan New Port Hinterland Complex (Ungdong District) and Jillye Junction on Namhae Expressway 4. Source: Development Plan for Busan-Jinhae Free Economic Zone announced by MOLIT on 26 December 2017; public releases distributed by the Ministry of Maritime Affairs and Fisheries on 3 May 2019 and 25 June 2019 5. Actual may be different from expectation 6. CI Obligations: (i) If the cash yield of FIs falls below 4.2% p.a. (the “Minimum Guarantee Cash Yield”) during the operation period, CIs are obligated to provide the CI CDS Loan to the Concessionaire, (ii) if specific conditions are met during the operating period, FIs have an option to obligate CIs complete the refinancing necessary to fully redeem FIs’ Investment Principal, (iii) if actual operating costs exceed the forecast operating costs under the Concession Agreement, CIs are obligated to either reimburse the excess cost to the Concessionaire or provide alternative operational services on a joint basis, (iv) if the termination payment received due to fault of the Concessionaire is insufficient to fully repay FIs’ equity capital and principal & interest of the subordinated loan, CIs are to provide a joint guarantee on the shortfall PAGE 1 Project Overview

Project Overview Location

Concessionaire Busan New Port the 2nd Rear Road Co., Ltd. Namhae Expressway Gimhae International Jungang Ministry of Land, Infrastructure and Transport Airport Competent Authority Expressway Airport Competing Road Project Type Build-Transfer-Operate BNP SR Expressway

Target Asset Busan New Port the 2nd Rear Road

Busan New Port Hinterland Complex (Changwon-si, Gyeongsangnam-do) ~ Location Elsukdo Bridge Jillye Junction on Namhae Expressway BNCT Co., Ltd. (Gimhae-si, Gyeongsangnam-do) Busan New Port (Busan New Port 2-3)

Length 15.3km (double 2-lane)

Gangwon 16 bridges Facilities 5 tunnels Seoul

Gyeonggi

5 years Construction Period Sejong 13 July 2012 ~ 12 January 2017

Gwangju Concession Term 30 years from operation commencement date

(Operation Period) 13 January 2017 ~ 12 January 2047 Busan

PAGE 2 Project Structure

Project Structure Key Financing Terms

Tranche Size Key Terms MKIF Other FI1

Equity: KRW 41.5bn (47.6%) Equity: KRW 9.7bn (11.2%) Sub-Loan: KRW 69.2bn (81.0%) Sub-Loan: KRW 16.3bn (19.0%) Senior Loan • Interest rate: Fixed 3.1% p.a. KRW 250.0bn Tranche A • Term: 23 years

Senior Loan Concessionaire CIs2 Lenders BNP SRRC

Senior Loan: KRW 289.9bn Equity: KRW 36.0bn (41.2%) • Interest rate: 3-year, AA- unsecured Concession Senior Loan corporate bond rate4 + 0.85% p.a. Agreement KRW 39.9bn Tranche B • Term: 23 years Competent Authority MOLIT

Senior Loan KRW 289.9bn Project Investment Summary

Equity KRW 87.2bn • Interest rate: Fixed 10% p.a. Senior Loan KRW 289.9bn Sub-Loan KRW 85.5bn • Term: 26 years

Subordinated Loan (“Sub-Loan”) KRW 85.5bn

Total Project investment KRW 462.6bn3 Total KRW 375.4bn

1. A private special asset SOC fund established and managed by Consus Asset Management Co., Ltd. 2. Lotte E&C Co., Ltd. 12.2%, Doosan E&C Co., Ltd. 5.2%, Ssangyong E&C Co., Ltd. 4.7%, POSCO E&C Co., Ltd. 4.7%, Hanwha E&C Corp. 4.1%, Halla Corp. 4.1%, Dongwon Construction Industries Co., Ltd. 2.7%, DSME Construction Co., Ltd. 2.7%, Bando E&C Co., Ltd. 0.8% 3. Excludes the loans provided by CIs 4. 2.228% on 22 September 2020

PAGE 3 Project Participants

Major CIs

Company Investment Form Credit Rating1 Asset2 Revenue2 Ranking3

Equity A+ KRW 5.0tn KRW 5.3tn #8 EPC company in Korea

Equity A+ KRW 6.7tn KRW 7.7tn #5 EPC company in Korea

Equity A- KRW 6.9tn KRW 4.0tn #11 EPC company in Korea

Major FI

Company Investment Form Credit Rating1 Asset2 Revenue2 Ranking

Equity #1 bank in Korea Senior Loan AAA KRW 387.4tn KRW 12.3tn (based on asset size2) Sub-Loan

1. Latest credit rating published by Korea Ratings Corporation, Korea Investor Services Inc. and/or NICE Investors Service Co. on bonds issued by respective company 2. Asset and revenue from 2019 consolidated financial statements of respective company; the revenue of Kookmin Bank is the sum of interest income and commission income 3. 2020 EPC company ranking published by Construction Association of Korea

PAGE 4 Competitive Analysis

Travel Distance1 (Unit: km) BNP SRR Competing Road 500 410 418 420 398 375 383 400 Gangwon 280 292 418km 300 253 258 Seoul 200 398km Gyeonggi 100 0 375km SeoulSeoul GyeonggiGyeonggi GangwonGangwon SejongSejong Gwangju Sejong

280km Travel Time1 (Unit: minutes) BNP SRR Competing Road 400 307 285 273 275 285 300 258 253km 191 210 191 200 171 Gwangju BNP 100 SRR

0 SeoulSeoul GyeonggiGyeonggi GangwonGangwon SejongSejong Gwangju

BNP SRR offers a competitive transportation means in terms of travel distance and time to users traveling to/from Busan New Port to major cities of Korea

1. The results of traffic due diligence studies arranged by the Concessionaire and MKIF

PAGE 5 Traffic Demand Overview

Competing Road B Current Traffic Demand Bases

Busan New Port D A Hinterland Complex Section 2 4 A Adjacent residential & Busan New Port B commercial complexes Busan New Port C BNP SRR C Hinterland Complex Section 1 1 D Busan New Port 1-1 ~ 2-3 2

Prospective Traffic Demand Bases1

1 Busan New Port 2-5

Golf Course 3 2 Busan New Port 2-6

3 Busan Second New Port

4 Dudong Industrial Complex

1. Source: Development Plan for Busan-Jinhae Free Economic Zone announced by MOLIT on 26 December 2017; public releases distributed by the Ministry of Maritime Affairs and Fisheries on 3 May 2019 and 25 June 2019

PAGE 6