Brookfield Infrastructure Partners Lp Limited Partnership · NYSE:BIP
Brookfield Infrastructure Partners Lp Limited Partnership — Brookfield Infrastructure Partners — Investor Day (September 2021)
69 slides from Brookfield Infrastructure Partners Lp Limited Partnership's investor day presentation, September 2021
Slide 1: Brookfield Infrastructure Partners
Brookfield Infrastructure Partners September 2021
Slide 2: Agenda
Agenda Year in review 03 Spotlight on Inter Pipeline 21 Building platform value 36 Data center development playbook 52
Slide 3: Year in review
Year in review Sam Pollock, CEO
Slide 4: 2021 has been an excellent year for Brookfield Infrastructure
2021 has been an excellent year for Brookfield Infrastructure Executed Delivered Maintained a Advanced strategic record strong balance several of our priorities financial results sheet ESG priorities 4
Slide 5: Strategic priorities – capital deployment
Strategic priorities – capital deployment We are on pace to invest over $3 billion into new growth initiatives YTD JUNE $billions 2018 2019 2020 2021 New Investments $ 1.1 $ 1.7 $ 1.2 $ 2.4 Growth Capex (Equity Component) 0.4 0.4 0.4 0.2 Total Growth Investment 1.5 2.1 1.6 2.6+ 5
Slide 6: Converted toehold investment into a transformational acquisition
Converted toehold investment into a transformational acquisition Privatization of Inter Pipeline is underway • Large-scale and highly contracted • Acquired ~20% economic interest alongside institutional partners at ~C$12 per share • Invested ~$1.8 billion YTD 6
Slide 7: Strategic priorities – capital recycling
Strategic priorities – capital recycling ~$2 billion raised from three asset sales Enwave NGPL Smart Meter Portfolio $1B proceeds $400M proceeds $350M proceeds ~30% IRR ~21% IRR ~58% IRR ~6.0x MoC ~2.4x MoC ~4.7x MoC 7
Slide 8: Delivered strong financial results
Delivered strong financial results Economic recovery has led to record results for BIP • 2021 YTD FFO per unit is ~20% above 2020 • Organic growth of 9%, with strong tailwinds • GDP-sensitive transport assets are performing well Volume Growth Roads +21% Ports +16% Rail +5% 8
Slide 9: Strengthened our financial position
Strengthened our financial position • Issued $1.4 billion of BIPC shares • Insulated business from rising rates with $9 billion of refinancings ‒ Extended average duration by ~5 years • Following IPL privatization, ~85% of our FFO will be generated in, or hedged to, U.S. dollars 9
Slide 10: Maintained an excellent balance sheet
Maintained an excellent balance sheet ~$3 billion No significant BBB+ 85% of corporate debt maturities credit rating of debt liquidity in next five non-recourse years 10
Slide 11: ESG principles are foundational to our business
ESG principles are foundational to our business • Published inaugural ESG Report in September • Raised $400 million green preferred securities over the last 12 months • Identified several initiatives to reduce carbon emissions • Commenced feasibility study for a green hydrogen export facility at Aus
Slide 12: Resulting in another year of solid price performance
Resulting in another year of solid price performance Annualized Total Returns1 LTM Since Inception BIP (NYSE) 34% 18% BIP (NYSE) BIP.UN (TSX) 28% 24% BIPC (NYSE) 27% 64% BIPC (TSX) 21% 41% S&P 500 BIPC (NYSE) DJBGI S&P Utilities Alerian MLP 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 13: We see meaningful growth opportunities in the near term
We see meaningful growth opportunities in the near term 13
Slide 14: Significant benefits from asset rotation
Significant benefits from asset rotation Proceeds from District Acquired IPL at Energy sale and BIPC ~13%1 going-in equity offering FFO yield (~5% FFO Yield) Results in ~12% FFO per unit accretion2 1. Represents estimated going-in FFO yield for IPL pre-Heartland. 2. Assumes full-year contribution fr
Slide 15: This will contribute to an increase in FFO per unit by over 20%
This will contribute to an increase in FFO per unit by over 20% ~$3.85 +12% ~$3.45 Asset +10% $3.13 Rotation Organic Growth 2020 2021F 2021 Annualized Run-Rate Run-rate payout ratio to improve to 68% 15
Slide 16: The long-term outlook is very favorable
The long-term outlook is very favorable 16
Slide 17: The infrastructure super-cycle is playing out as expected
The infrastructure super-cycle is playing out as expected Sovereign and Data infrastructure Midstream Transport assets corporate debt in need of an sector requires critically rising upgrade capital bottlenecked • Governments and • Total global data usage • Increasing scarcity • Minimal incremental c
Slide 18: We continue to execute our proven investment strategy
We continue to execute our proven investment strategy Buying De-risking Building for value assets platforms 18
Slide 19: What does 'platform value' mean to BIP?
What does ‘platform value’ mean to BIP? Brookfield Infrastructure Glossary Grow-tility [grow-til-i-tee] noun 1. Business with utility-like defensive attributes but offers premium growth potential Platform [plat-form] noun 1. Business with substantial medium- to long-term organic and consolidation gr
Slide 20: Building platforms will create significant value for shareholders
Building platforms will create significant value for shareholders 50% increase Outsized profit in backlog realized on exit ~$3B+ Illustrative Individual Exit Metrics Investment Platform ~$2B Investment IRR ~13% 20%+ Multiple of ~2x 4x+ Capital (MoC)1 Average backlog Projected backlog 2015-2020 in ne
Slide 21: Spotlight on Inter Pipeline
Spotlight on Inter Pipeline Scott Peak, Managing Partner
Slide 22: Midstream investment approach
Midstream investment approach Current environment provides unique opportunity to selectively acquire high-quality assets Underwritten growth limited to Highly contracted commercialized opportunities Strategically-located Low terminal value reliance Midstream investment strategy ESG/transition focus
Slide 23: Strategic investment in a highly contracted midstream platform
Strategic investment in a highly contracted midstream platform • $13 billion EV take-private transaction • Sourced on a proprietary basis • Value based • Attractive cash yield • Majority of EBITDA from long-term contracted pipelines 23
Slide 24: Represents a unique opportunity for our business
Represents a unique opportunity for our business Critical infrastructure for 80% of EBITDA Well-positioned to support North American contracted with ~63% our customers’ large-scale hydrocarbon transportation under firm take-or-pay initiatives to reduce contracts, with an average carbon footprint rem
Slide 25: Checks all the boxes for a value-based investment opportunity
Checks all the boxes for a value-based investment opportunity Attractive entry point ~10x run-rate EBITDA multiple Quick payback period Less than eight years 13% going-in FFO yield Robust cash yield 16%+ run-rate FFO yield Conservative capital structure Will retain investment-grade corporate balance
Slide 26: Why were we successful?
Why were we successful? Patiently Moved quickly and Made an all-cash Provided share monitored IPL until secured a deep- offer that was alternative and a corporate value toehold in viewed favorably by secured support transaction catalyst 2020 representing independent proxy from IPL materialized ~20%
Slide 27: BIPC continues to generate strong market interest
BIPC continues to generate strong market interest To date, we have issued 22 million BIPC shares to IPL shareholders, representing over 95% of the maximum allotment 1 2 3 BIPC improved the Strong interest from diverse Transaction increased BIPC attractiveness IPL shareholder base market cap by 50% o
Slide 28: What are IPL's business segments, and what is our business strategy?
What are IPL’s business segments, and what is our business strategy? 28
Slide 29: IPL represents critical, long-term contracted infrastructure
IPL represents critical, long-term contracted infrastructure >60% EBITDA Heartland Facilities Petrochemical Transportation Infrastructure Complex Marketing % EBITDA1 54% 8% 28% 9% % Contracted 100% 100% 68%2 0% Avg. Contract Tenor (Years) 17 5 9 n/a 1. LTM EBITDA proforma completion of Heartland Pet
Slide 30: Brookfield's value-add approach
Business plan execution leveraging our best practices Active stakeholder engagement Customers, employees, communities, regulators Rigorous risk management framework Currency, commodity, counterparty Brookfield’s Value-Add Alignment, opportunity, accountability Business plan, value-creation metrics,
Slide 31: In less than a month, we have already made a significant impact
In less than a month, we have already made a significant impact • Re-constituted the IPL Board • Agreed Plan of Arrangement to privatize IPL by year-end • Hosted IPL employee town hall, introducing Brookfield and our strategic priorities for the business • Initiated a 100-day plan, including segment
Slide 32: Business plan strategy by segment
Business plan strategy by segment Execute 100-day implementation plan, and focus on longer-term business plan Heartland Facilities Petrochemical Transportation Infrastructure Complex Corporate • Optimize operations • Optimize operations • Complete HPC on- • Alignment and time, on-budget accountabili
Slide 33: Supporting customers' decarbonization objectives
We believe supporting and participating in our customers’ public decarbonization objectives will create value within IPL’s platform 33
Slide 34: IPL's largest customers are part of an initiative to achieve net-zero
Customers will value our help to meet net-zero commitments IPL’s largest customers are part of an initiative to achieve net-zero GHG emissions from local operations by 2050—creating a significant opportunity for a company with our expertise j Hydrogen Byproduct Carbon Capture Heartland to yield exce
Slide 35: In summary, Inter Pipeline represents…
In summary, Inter Pipeline represents… A significant Continued An accretive Highly contracted capital expansion of investment for business with deployment Brookfield-owned BIP and BIPC attractive energy opportunity and operated holders transition infrastructure investment platforms opportunities 35
Slide 36: Building platform value
Building platform value David Krant, CFO
Slide 37: Market-based multiples will significantly undervalue our marquee franchises
Market-based multiples will significantly undervalue our marquee franchises where we have created platform value 37
Slide 38: The value of a business has two elements
This is because the value of a business has two elements Market-based 1 2 multiples will not capture the In-place Value for organic cash flows growth “engine” incremental value associated with an Use of market-based embedded growth multiples can be appropriate platform 38
Slide 39: The value for growth may exceed the value for in-place cash flows
The value for “growth” (or goodwill) may exceed the value for in-place cash flows if we are successful in building platforms 39
Slide 40: This significant form of value creation is often not seen until exit
This significant form of value creation is often not seen until exit Illustrative Exit Metrics Individual Investment Platform Investment IRR ~13% 20%+ Multiple of Capital (MoC)1 ~2x 4x+ AFFO Yield at Exit ~7–9% <5% 1. MoC calculated assuming a 7–10-year investment hold period. 40
Slide 41: We build platform value in a variety of ways
We build platform value in a variety of ways Invest in businesses Hire strong Source recurring with favorable management teams streams of organic growth dynamics growth opportunities Actively manage Maintain a Develop strategic balance sheet and commercial focus partnerships capital resources 41
Slide 42: Enwave is a textbook example of how we build a platform
Enwave is a textbook example of how we build a platform Identified a sustainable energy opportunity and methodically built the leading North American district energy (DE) business • Acquired largest geothermal cooling DE system in 2012 Completed series of tuck-in acquisitions, targeting the best dis
Slide 43: It also shows how we drive organic growth within a franchise
It also shows how we drive organic growth within a franchise • Connected 135+ new buildings—leveraging Brookfield’s real estate platform • Refocused sales culture to drive organic growth and utilize existing capacity • Assembled a top-tier management team that excelled in integration and optimizatio
Slide 44: This can lead to exceptional shareholder returns on exit
This can lead to exceptional shareholder returns on exit ~30x <4% 6x EV/EBITDA multiple AFFO exit yield Multiple of capital 44
Slide 45: Building platform value takes time and significant effort
Building platform value takes time and significant effort, but it can often go unnoticed 45
Slide 46: Today, we're building platforms within many of our businesses
Today, we’re building platforms within many of our businesses Residential Brazilian U.K. Last-Mile U.K. Infrastructure Electricity Business Ports Transmission N.A. Global Fiber Telecom Global Data Sub-Metering Networks Towers Centers 46
Slide 47: Which will create meaningful future value
Which will create meaningful future value Expect to deploy $5 billion building platforms over the next five years ~$1.8B ~$800M ~$600M ~$500M Last-mile utility Data centers Telecom towers Residential connections in S.A., Asia in Europe, U.K. infrastructure in the U.K. and Europe and India in N.A., U
Slide 48: And lead to a meaningful increase in our backlog
And lead to a meaningful increase in our backlog +50% ~$3B+ ~$2B ~$1B Average backlog Average backlog Projected backlog 2010–15 2015–20 in next 2–3 years 48
Slide 49: Platform building was historically overlooked in our valuation
Platform building was historically overlooked in our valuation Realized Consensus Multiples1 Realized Premium District Energy ~15x 30x 100% Chilean Electricity 12x 16x ~33% Transmission North American 12x 16x ~33% Transmission 1. District Energy multiple based on average analyst multiples for distri
Slide 50: And it continues to be across our largest franchises
And it continues to be across our largest franchises Under Development Consensus Multiples1 Platform Value1 Premium N.A. Residential Infrastructure 14x 15–20x 10–40% Brazil Transmission 14x 16–18x 15–30% U.K. Regulated Distribution 16x 20–25x 25–50% U.K. Port Operation 15x 20–25x 33–67% Data Centers
Slide 51: We could realize a 25–50% premium if we capture platform value
We could realize a 25–50% premium if we are successful in capturing platform value across our businesses 51
Slide 52: Data center development playbook
Data center development playbook Sikander Rashid, Managing Partner
Slide 53: Data centers make an ideal sector for platform investment
Data centers make an ideal sector for platform investment
Slide 54: We believe we can make over $2 billion of profit
We believe we can make over $2 billion of profit, if we are successful in our strategy 54
Slide 55: Why data centers are a desired asset class
Why data centers are a desired asset class Strong Infrastructure Highly Attractive Characteristics Tailwinds • Highly contracted cash flows • Cloud industry to surpass $350 billion by 2024 • Attractive margins and cash flow conversion • Large capex requirements to meet industry demand • Scalable pla
Slide 56: Data centers represent one of the fastest-growing asset classes
Data centers represent one of the fastest-growing asset classes Every minute on the internet, there are: 198 million 69 million 500 hours emails sent messages sent of content uploaded Data center capacity requirement of over 6,000 MW over the next three years alone 56
Slide 57: Methodically building a global hyperscale data center platform
Methodically building a global hyperscale data center platform Acquired and Added Developed Provided leveraged experienced strategic capital established resources in partnerships resources businesses growth markets in the sector 57
Slide 58: We started with a leading platform in Brazil
We started with a leading platform in Brazil In 2019, we acquired Ascenty • Scalable business with strong management • 50/50 partnership with leading hyperscale operator, Digital Realty • 36 MW of operating capacity at acquisition, with clear development pipeline 27 Data centers • Strong customer re
Slide 59: Our investment is playing out as expected
Our investment is playing out as expected • Added seven new locations (61 MW capacity) • Expanded into Chile and Mexico • Pipeline of further ~90 MW of capacity +61 MW +25% Capacity EBITDA >$300 >200MW 97MW $90 $112 36MW At acquisition Today 2025 At acquisition Today 2025 59
Slide 60: Many large markets are a long way from maturity
Many large markets are a long way from maturity Early Stage Developing Maturing 60
Slide 61: Brookfield's competitive advantages help build up the platform
Brookfield’s competitive advantages help build up the platform Stat Stat Stat Stat Local presence Global business Development Renewables allows for affords access to and construction platform provides premier site strong customer expertise helps leverage to build identification relationships to mana
Slide 62: India: Recreated partnership with Digital Realty
India: Recreated partnership with Digital Realty • 19% annual data demand growth through 2025 • Cloud penetration: 20% (today) to 50% (2025) • Fragmented market 2,500 MW 5.4x DC capacity in India 460 MW 2020 2030 62
Slide 63: Asia Pacific: Leveraging our Australian business to expand
Asia Pacific: Leveraging our Australian business to expand Two high-quality data centers in Highly attractive illustrative Sydney and Adelaide target markets for expansion • Long-term contracts Tokyo Seoul • Scalable business to capture APAC growth Singapore • Announced Sydney pipeline: >40MW 63
Slide 64: Quickly expanding our platform in Europe
Quickly expanding our platform in Europe 2021 take-up of >370 MW in FLAP1 markets Acquired 100 MW renewable energy powered project in Amsterdam Plans to expand into other European markets 1. Frankfurt, London, Amsterdam, Paris 64
Slide 65: What does a hyperscale data center platform mean for BIP?
What does a hyperscale data center platform mean for BIP? 65
Slide 66: We could generate ~$2 billion of profit if we execute well
We could generate ~$2 billion of profit if we execute well $650M +$100M >4x Net-to-BIP equity EBITDA growth from expected deployment expectation today expected by 2025 multiple of capital (5x increase from 2021) 66
Slide 67: Questions?
For investors seeking to compound wealth over time Brookfield is creating value by: BIP is your Grow-tility • Investing on a value basis ~4% 5-9% Distribution Distribution • Building platforms to drive organic yield growth target growth and create goodwill 10% 19% • Recycling capital at attractive C
Slide 68: Q&A
Q&A Brookfield
Slide 69: Notice to Recipients
Notice to Recipients All amounts are in U.S. dollars unless otherwise specified. Unless otherwise future results, performance or achievements expressed or implied by these IMPORTANT NOTE REGARDING NON-IFRS FINANCIAL MEASURES indicated, the statistical and financial data in this presentation is prese
Brookfield Infrastructure Partners — Investor Day (September 2021) on 6ix