3i Infrastructure PLC · LSE:3IN
3i Infrastructure — FY2008 Earnings Presentation
38 slides from 3i Infrastructure's earnings presentation, Jun 12, 2008
Slide 1: Annual results to 31 March 2008
Annual results to 31 March 2008 12 June 2008
Slide 2: Introduction
Introduction Peter Sedgwick Chairman, 3i Infrastructure Limited 2
Slide 3: Agenda
Agenda Highlights Peter Sedgwick Chairman, 3i Infrastructure Limited Business review Michael Queen Managing Partner, Infrastructure, 3i Investments plc Financial review Stephen Halliwell CFO, Infrastructure, 3i Investments plc Closing remarks Michael Queen 3
Slide 4: Highlights
Highlights • Good performance over the period – Net IPO proceeds 88% invested or committed – Total return of 13.1% • Portfolio performing in line with expectations • Final dividend of 3.0 pence approved by the Board (bringing total dividend to 5.0 pence per share) • Raising funds to continue to inve
Slide 5: Corporate governance and board of Directors
Corporate governance and board of Directors Peter Sedgwick Phil Austin Martin Dryden Peter Wagner Independent non- Independent NXD Independent NXD Independent NXD executive Chairman Paul Waller Steven Wilderspin NXD, 3i appointee Independent NXD 5
Slide 6: Investment review
Investment review Michael Queen Managing Partner, Infrastructure, 3i Investments plc 6
Slide 7: Performance against objectives
Performance against objectives Objective Status • IPO proceeds fully invested • 64% invested and 88% invested or Ahead within two years of admission committed at 31 March • 12% total return on initial net • 13.1% total return to 31 March proceeds over the long term • NAV of 108.6p per share, or 105.
Slide 8: Investment activity to March 2008
Investment activity to 31 March 2008 Cumulative investment 234.4 278.5 285.0 369.5 405.9 430.9 442.1 cost (£m): cash 80.0 Debt portfolio committed 171.0 India Fund T2C 25.0 11.2 I2 36.4 84.5 44.1 6.5 234.4 Initial portfolio Further T2C Oystercatcher India Fund Alma Mater Novera Cash Balance investme
Slide 9: The market
The market Significant investment opportunities across all our regions UK & Europe North America Asia Well-established role for Potentially the world’s We have identified India private investors in largest infrastructure as the most attractive infrastructure market geography in Asia • Mature assets
Slide 10: Internationally Connected
Internationally Connected Europe London Frankfurt New York New Delhi Mumbai • Infrastructure Team operates from 5 offices in key markets • Access to a global network of 23 offices in 14 countries • Access to wider network of over 250 investment professionals 23 executives in London, New York, Mumbai
Slide 11: Investment approach
Investment approach Asset intensive businesses that provide essential services Transport Utilities Social Infrastructure Airports Power generation Primary and secondary PFI Ports Power transmission Public Private Partnerships Ferries Electricity & gas distribution Government accommodation Toll roads
Slide 12: Diversification of risk/return across asset life
Diversification of risk/return across asset life Early stage/construction Operational growth Mature/steady state Greenfield projects Buy & build portfolios Corporate acquisitions New build PFI/PPP Privatisations Steady state operations • Accessing the most • Optimising the • Focus on cash yield and
Slide 13: Delivering on the pipeline
Delivering on the pipeline Investment pipeline of c.£1 billion at advanced stage of consideration Strategic approach Dynamic approach Ability to move quickly and with confidence Evaluate target sectors and geographies Take advantage of market dislocations Systematic origination process Identify “dis
Slide 14: Portfolio breakdown by value – at 31 March
Portfolio breakdown by value – at 31 March By sector By maturity By geography (1) Social Early-stage 9% infrastructure 36% Asia 8% Continental Europe Utilities 22% 44% Mature 53% Operational growth UK Transportation 38% 70% 20% (1) Continental Europe includes investment in Oiltanking, with operation
Slide 15: Anglian Water Group Limited
Anglian Water Group Limited Interest • 9% equity interest and loan notes in AWGL Description • Owner of Anglian Water, fourth largest water/waste water company in England and Wales, Morrison Facilities Services and a property development business Strategy • Deliver a reliable supply of clean, safe d
Slide 16: I2
I2 Interest • 31.2% limited partnership interest Description • Makes and manages investments in PFI projects in the UK and continental Europe • 84 assets in the portfolio Strategy • Build a diversified portfolio of investments, generating stable long-term returns for investors • Maximise value throu
Slide 17: New investment – Oystercatcher
New investment – Oystercatcher Interest • 45% equity holding in three Oiltanking subsidiaries through Oystercatcher acquisition company Description • Provider of third-party storage facilities for oil and petroleum products in the Netherlands, Malta and Singapore Strategy • Experienced management te
Slide 18: New investment – 3i India Infrastructure Fund
New investment – 3i India Infrastructure Fund Interest • US$250 million commitment – no additional fees payable by 3i Infrastructure to 3i Group Description • US$1.2 billion fund set up by 3i Group to invest in Indian infrastructure • Cornerstone commitments of US$250 million by 3i Group and 3i Infr
Slide 19: Financial review
Financial review Stephen Halliwell CFO, Infrastructure, 3i Investments plc 19
Slide 20: Total return
Total return Period from 16 January 2007 to 31 March 2008 Investment Consolidated basis (£m) basis (£m) Performance Unrealised profits on revaluation of investments 48.5 68.6 indicator: Total return of Exchange gains on investments 18.1 1.2 12% per annum Portfolio income (net of fees) 24.4 37.0 on n
Slide 21: Balance sheet
Balance sheet As at 31 March 2008 Investment basis Consolidated basis £m £m Investment portfolio 489.7 765.1 Other net assets 26.2 27.4 Cash and cash equivalents 253.7 259.6 Borrowings - (156.1) Net assets 769.6 896.0 Shareholders’ equity 769.6 768.3 Minority interest - 127.7 769.6 896.0 Diluted NAV
Slide 22: Reconciliation of movements in NAV per share
Reconciliation of movements in NAV per share Performance 12.9p indicator: 105.6p Annual distribution (5.0)p (0.9)p yield, on full 100.0p investment of IPO (1.4)p proceeds, of 5% of the net IPO proceeds Status: total dividend of 5.0p per share, or 5.1% of net IPO proceeds IPO proceeds IPO costs Total
Slide 23: Valuation
Valuation Weighted average discount rate • Valuation policy India – IPEVC guidelines Fund • Methodology – Discounted cash flow basis 13.1% (Sept 2007) 12.4% (Mar 2008) – Share of Fund net assets – Quoted – closing bid price PFI assets – Sales basis 23
Slide 24: Reconciliation in movement in portfolio value
Reconciliation in movement in portfolio value (£m) 94.4 489.7 207.7 (27.8) (19.0) 234.4 Initial portfolio New Asset Income Closing value investment Proceeds returns received portfolio value Investment Returns 24
Slide 25: Debt maturity profile
Debt maturity profile Annual refinancing and new debt as a % Long-term of existing committed debt 64% financing in place India Fund Other Assets 64% of the existing committed debt needs to be raised 4% 4% 5% 5% 6% 4% 4% 1% 1% 2% after 2018 Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar 2008 2009 20
Slide 26: Closing remarks
Closing remarks Michael Queen Managing Partner, Infrastructure, 3i Investments plc 26
Slide 27: Key terms of the offering
Key terms of the offering • Placing & Open Offer of £115 million at 106 pence per share • 3i Group (46% shareholder) will subscribe for £25 million of new shares under the Open Offer – remaining 3i Group entitlement is being placed firm with investors • New placing shares will not rank for proposed
Slide 28: Offering timetable
Offering timetable • Record date for entitlement under Open Offer: 10 June 2008 • Announcement of Placing & Open Offer and Final Results: 12 June 2008 • Ex-entitlement date under Open Offer: 12 June 2008 • Ex-dividend date (2007/8 final dividend): 18 June 2008 • Closing of Open Offer: 3 July 2008 •
Slide 29: Closing remarks
Closing remarks • On track to achieve full investment within two years of Admission • Return and distribution objectives achieved ahead of targets • Market prospects for infrastructure remain positive • Taking advantage of new market opportunities • Raising £115 million in new equity to continue to
Slide 30: Appendix
Appendix 3i Infrastructure Limited | 6D 30
Slide 31: New investment – Alma Mater
New investment – Alma Mater Interest • 40.7% equity holding acquired from 3i Group pursuant to an option granted at IPO Description • Invests in UPP Group, a portfolio of companies responsible for building, managing, operating and maintaining accommodation at universities in England Strategy • UPP a
Slide 32: New investment – debt portfolio
New investment – debt portfolio • Temporary dislocation in credit market created an opportunity to invest in debt facilities at a discount to face value • Pricing of these facilities delivers attractive, equity-like returns and high cash yields • Since the period end 3i Infrastructure has made furth
Slide 33: Initial portfolio - Octagon
Initial portfolio - Octagon Interest • 26.3% equity interest and loans Description • Concession company under a 35-year PFI contract to build, operate and maintain the Norfolk and Norwich University Hospital • Receives RPI-linked payments from the NHS Trust to cover services and building maintenance
Slide 34: Initial portfolio – Alpha Schools
Initial portfolio – Alpha Schools Interest • 50% equity interest • Commitment to invest a further £7.6 million in loan notes Description • Concession company under a 30-year PFI contract to build, operate and maintain 11 new schools on 10 sites in the Highland region of Scotland • Receives RPI-linke
Slide 35: New investment – T2C
New investment – T2C Interest • 16.7% equity interest and loans Description • Construction of a new-build waste to energy plant to generate heat and power from refuse-derived fuels • 15-year fixed price ‘take or pay’ contract Strategy • Management team focussed on the timely completion Asset total r
Slide 36: New investment – Novera
New investment – Novera Interest • 10.0% equity interest Description • Established, UK-focussed renewable energy company which generates electricity from wind, waste and landfill gas Developments in the period Asset total return (£m) 0.0 • In February 2008 3i Infrastructure confirmed it had approach
Slide 37: Investment Partners
Investment Partners Michael Queen Cressida Hogg Neil King Girish Baliga Anil Ahuja Chris Rowlands Paul Waller Richard Kilner 37
Slide 38: Governance
Governance • Independent Chairman, four independent non-executive directors and 3i Group appointed non-executive director • Committed to observe requirements of the Combined Code Board of • Responsibilities: Directors – Acts as investment committee / approves investment opportunities – Responsible f