Brookfield Infrastructure Partners Lp Limited Partnership · NYSE:BIP
Brookfield Infrastructure Partners Lp Limited Partnership — Brookfield Infrastructure Partners — Investor Day (September 2024)
68 slides from Brookfield Infrastructure Partners Lp Limited Partnership's investor day presentation, September 2024
Slide 1: Brookfield Infrastructure Partners
Brookfield Infrastructure Partners
Slide 2: Agenda
Year in Review Differentiated Access to Debt Capital Markets The Digitalization (R)Evolution Business Outlook & Closing Remarks
Slide 3: Year in Review
Year in Review David Krant, Chief Financial Officer, Infrastructure 3
Slide 4: Successful execution of our 2024 strategic priorities
Successful execution of our 2024 strategic priorities Strong financial position On track to deliver Demonstrated multiple and results capital recycling target growth levers 4
Slide 5: On track to deliver solid growth…
1 On track to deliver solid growth… Q2 YTD FFO per Unit1 $1.58 10% $1.44 2023 2024 1. On a constant currency basis and adjusted for the impact of foreign exchange 5
Slide 6: …and continue our 15-year history of distribution increases
1 …and continue our 15-year history of distribution increases 9% Distributions per Unit CAGR $1.62 $0.42 2009 2011 2013 2015 2017 2019 2021 2023 2024F 1 2024 distribution increase of 6% is supported by a conservative payout ratio of 67%2 1. 2024 distribution is based on YTD June 30, 2024 distributio
Slide 7: Value creation through executing our capital markets strategy…
1 Value creation through executing our capital markets strategy… 2024 YTD Financing Activity $1B $1B $1B $4.5B Finance new Right size capital Opportunistic Extend investments structures repricing maturities Provided liquidity, extended duration and managed interest rate impacts 7
Slide 8: …while maintaining our commitment to a strong balance sheet
1 …while maintaining our commitment to a strong balance sheet BBB+ 80% 7&15 Yr Investment-grade rated Long-term, fixed Asset level & corporate by two agencies rate debt average term to maturity 8
Slide 9: Our $2B capital recycling target is nearly complete
2 Our $2B capital recycling target is nearly complete 2024 YTD Capital Recycling Capital Recycling Highlights 5% 5% 42% 17% IRR 22% IRR $1.8B French telecom operation Mexican regulated natural gas transmission (Fiber carve-out) (1 of 2 pipelines) 47% 1% Utilities Transport Midstream Data Corporate 9
Slide 10: We have three avenues to pursue growth in our business
3 We have three avenues to pursue growth in our business i ii iii Tuck-in and Embedded Mergers follow-on organic and investments growth acquisitions 10
Slide 11: So far this year, we have focused on tuck-ins and organic growth
3 So far this year, we have focused on tuck-ins and organic growth i ii iii Tuck-in and Embedded Mergers follow-on organic and investments growth acquisitions 11
Slide 12: Very active year for tuck-in and follow-on investments
i Very active year for tuck-in and follow-on investments U.S. Retail Colocation Data Centers Brazil Integrated Rail & Port Logistics Indian Telecom Towers Cyxtera VLI ATC India EV (100%): $4.0 billion EV (10%): $500 million EV (100%): $2.2 billion Closed: January 2024 Closed: April 2024 Closed: Sept
Slide 13: Embedded organic growth driven by record capital backlog levels
ii Embedded organic growth driven by record capital backlog levels Project Backlog Significant Projects ($B) $1.0 $3.9B $1.2B U.S. semiconductor Global data center facility platform $1.1 ~$8B $0.4 $5.5 $0.9B $0.4B Utility connections Midstream bolt-ons order book & expansions Utilities Transport Mids
Slide 14: Our number-one priority is to create value for shareholders
Our number-one priority is to create value for shareholders Here is how we have done it this year… 14
Slide 15: Our key value creation drivers this year
Our key value creation drivers this year Optimizing Capturing capital tailwinds from structures Digitalization 15
Slide 16: Differentiated Access to Debt Capital Markets
Differentiated Access to Debt Capital Markets Alexandra Cohl, Managing Director, Infrastructure 16
Slide 17: We have unparalleled access to large-scale capital to finance our businesses
We have unparalleled access to large-scale capital to finance our businesses Immense scale and Longstanding Multi-decade track breadth of our relationships with global record of disciplined business lenders and investors borrowing 17
Slide 18: The universe of financing options for infrastructure continues to expand
The universe of financing options for infrastructure continues to expand +$2.0T ~3x +$0.7T 2008 2024 YTD Leveraged Loans High Yield Bonds Private Credit ABS Investment Grade Bonds U.S. market data; 2024 year-to-date as of August 2024; sources include Bloomberg, LCD, LevFinInsights, Finsight and Infra
Slide 19: As the capital markets have evolved, so have we
As the capital markets have evolved, so have we 19
Slide 20: We prudently access diversified sources of financing for our businesses
We prudently access diversified sources of financing for our businesses 6% 6% Term Loan B Other1 8% Securitizations 30% Non-recourse 50% Bank Loans Corporate Bonds Debt by Type 1. Other includes high-yield bonds and hybrid debt instruments 20
Slide 21: The investment grade bond markets are our largest source of debt capital
The investment grade bond markets are our largest source of debt capital Largest and most-liquid bond market globally Flexible structures $10.7B 50% IG Bond Markets Long duration and permanent capital 21
Slide 22: Our expansive global lending relationships provide unique advantages
Our expansive global lending relationships provide unique advantages Highly flexible structures Deep and diversified global reach $7.8B Bank Debt Attractive relative pricing and tenor 30% 22
Slide 23: We approach the Term Loan B (TLB) market with discipline
We approach the Term Loan B (TLB) market with discipline Deep and liquid market 6% Covenant-lite $1.6B TLB Financing Significant structural flexibility Opportunistic repricing capability 23
Slide 24: Case study: opportunistic TLB repricing
Case study: opportunistic TLB repricing • Repriced $4.6 billion of TLB financing ($1.3 billion net to BIP) across four businesses and achieved approximately $30 million in annual interest savings 75 bps spread reduction 50 bps spread reduction U.S. U.S. North American Canadian LNG Export Facility Ga
Slide 25: The securitization market is well suited for infrastructure businesses
The securitization market is well suited for infrastructure businesses Increasing depth 8% Highly rated and portable structures $2.1B ABS & Aligned with highly contracted businesses Securitization 25
Slide 26: Case study: North American hyperscale data center platform
Case study: North American hyperscale data center platform • Raised $1.1 billion (approximately $160 million net to BIP) across two ABS issuances this year to support our highly contracted growth backlog • First and only AAA-rated data center ABS issuances • Secured by three data center campuses in
Slide 27: Our proactive approach to managing our capital structures
Our proactive approach to managing our capital structures insulates us from volatility and adverse market conditions 27
Slide 28: We are well positioned to be patient…or opportunistic
We are well positioned to be patient…or opportunistic 0 Non-Recourse Debt Maturity Profile Material capital markets 57% maturities until 2026 8 Year Weighted average maturity 16% 10% 11% ~80% 2% 4% Fixed rate or hedged debt 2024 2025 2026 2027 2028 Beyond 28
Slide 29: We remain insulated from interest rate volatility
We remain insulated from interest rate volatility Net to BIP (US $B, except where noted) 2025 2026 2027 Total maturities $1.1 $2.7 $4.1 Maturities exposed to higher interest rates1 $0.5 $1.7 $3.1 Estimated impact on interest expense $5M $15M ($5M) 1. Excludes floating rate debt and amortization 29
Slide 30: Key takeaways
Key takeaways Our scale and track record afford us more access to capital than traditional corporates Our consistent approach to risk management has positioned us well during recent volatility We employ a proactive and opportunistic model to lower our capital cost and enhance investment returns 30
Slide 31: The Digitalization (R)Evolution
The Digitalization (R)Evolution Scott Peak, Co-President, Infrastructure 31
Slide 32: Setting the stage
Setting the stage Data demand represents Digitalization requires We are observing a deep a tailwind, with broader significant capital opportunity set for implications for our for upgrades and future digitalization business than we growth investments, well beyond anticipated our prior expectations 32
Slide 33: Data-driven power demand: creating a domino effect across our business
Data-driven power demand: creating a domino effect across our business Power Demand Semiconductor Chips U.S. Data Centers 45GW ~5x ~3x 5-15 kw 16GW Per Rack 20-70 kw Per Rack Non-AI Workloads AI Workloads 2023 2030F 33
Slide 34: Digitalization has broad implications across our business
Digitalization has broad implications across our business Fiber Midstream Utilities Data Centers Power Generation Natural End Gas Users Towers Gas Pipelines Transmission Data Centers Substations / Gas Storage Land / Shell Transformers Gas Processing Distribution Other 34
Slide 35: Greater than 60% of BIP's FFO is exposed to digitalization
Greater than 60% of BIP’s FFO is exposed to digitalization • We have been investing in businesses that benefit from growth in data demand for over a decade • Our well-established platforms each command a global leadership position 1 Midstream 2 Utilities 3 Data Centers 4 Towers 5 Fiber Pipelines: 25
Slide 36: Data demand: unlocking significant value in our assets
Data demand: unlocking significant value in our assets In the places you may expect… …and places you may not Data Centers Gas Storage • AI is driving renewed excitement for both hyperscale • Natural gas is now established as a critical transition and retail colocation data centers fuel • Demand is fo
Slide 37: At Centersquare, the pieces have come together
At Centersquare, the pieces have come together • Strong demand tailwinds, combined with a strategic combination Carved out from Acquired in Concurrent with AT&T in 2018 2024 Acquisition Available capacity Strong sale engine Optimized balance sheet Scaled platform Primarily owned assets × B
Slide 38: At Rockpoint, power demand translating to gas storage demand
At Rockpoint, power demand translating to gas storage demand • Built over a decade of value-based investments and value-enhancing initiatives AECO Wild Warwick Lodi Active Asset Management Hub Goose Disciplined, highly accretive M&A Corporatized the business and Data demand creating long- plat
Slide 39: 'AI Infrastructure' is an emerging digitalization asset class
‘AI Infrastructure’ is an emerging digitalization asset class encompassing the essential assets for high-compute operations 39 39
Slide 40: Massive capital requirements ahead for AI & digitalization
Massive capital requirements ahead for AI & digitalization $100B “This year, [big tech firms] "… we're investing a “When I talk about building are budgeting an estimated significant amount in the gigawatt or multi-gigawatt $400B for capital AI space and in data centers [for these AI expenditures, mos
Slide 41: Before we discuss new opportunities, let's revisit our ground rules
Before we discuss new opportunities, let’s revisit our ground rules 41 41
Slide 42: Consistent infrastructure investment criteria
Consistent infrastructure investment criteria • We may periodically test the suitability of new infrastructure categories • Our risk-adjusted return criteria remains unchanged; including, but not limited to: Essential to society and the Long-term contracts generating economy stable cash flow Strong c
Slide 43: Our infrastructure perimeter evolves with the backbone of the economy
Our infrastructure perimeter evolves with the backbone of the economy • Asset revenue models periodically evolve & adopt established market frameworks Mobile Era Cloud Era AI Era 2007–18 2018–24 2024+ 60 50 Fiber Colocation Semiconductor Hyperscale Power Capacity (GW) data centers manufacturing data
Slide 44: Expanding the perimeter…AI Infrastructure and beyond
Expanding the perimeter…AI Infrastructure and beyond • A potential market opportunity of more than $8 trillion over the near-to-medium term ? ? ~$2T Robotics >$1T Autonomous >$4T Energy Transportation Management >$1T Compute-as- Semiconductor a-Service Manufacturing Next 0–3+ years 3–5+ years 44
Slide 45: Uniquely positioned to be the leader in digitalization and AI Infrastructure
As an established partner of choice, we are uniquely positioned to be the leader in digitalization and AI Infrastructure — a natural extension of our business 45 45
Slide 46: Our significant competitive moat continues to be a differentiator
Our significant competitive moat continues to be a differentiator Established Access to Leading The operating large-scale stakeholder and Brookfield platforms capital corporate Ecosystem of scale relationships 46
Slide 47: What does this all mean?
What does this all mean? Our future investment Our assets are more opportunity set is valuable than we massive, exceeding our initially assumed prior expectations The tailwinds for our business have never been stronger 47
Slide 48: Business Outlook & Closing Remarks
Business Outlook & Closing Remarks Sam Pollock, Chief Executive Officer, Infrastructure 48
Slide 49: Excellent track record of creating value and returning capital to investors
Excellent track record of creating value and returning capital to investors Significant excitement about the outlook for our business Opportunity to participate in our future growth at attractive levels 49
Slide 50: Brookfield Infrastructure has delivered a 15% CAGR and returned over $10 billion
Brookfield Infrastructure has delivered a 15% CAGR and returned over $10 billion of cash to investors since inception 50
Slide 51: What does that mean?
What does that mean? Today, you would own1: 225 BIP units worth 100 BIP units purchased $7,603 at BIP’s inception cost 25 BIPC shares worth $1,900 $1,061 Received distributions of $3,948 Represents a 6.6x multiple on invested capital 1. Based on the closing price of BIP and BIPC on September 20, 202
Slide 52: Looking back, we are very proud of our track record…
Looking back, we are very proud of our track record… …but looking ahead, we think things could be even better! 52
Slide 53: Why we're excited about the outlook for our business
Why we’re excited about the outlook for our business Industry trends are Base business is the Significant growth very strong best it’s ever been is ahead of us 53
Slide 54: The trends in our industry are very strong
1 The trends in our industry are very strong Need for infrastructure investment has Inflation is moderating, yet still ahead of never been greater historical averages - Three Ds driving massive investment - Current average is 50–100 bps super-cycle above 2019 levels - $94T of investment required by
Slide 55: The base business has delivered excellent financial results…
2 The base business has delivered excellent financial results… 2018 2020 2022 20241 FFO per share $1.87 $2.09 $2.71 $3.10 Payout ratio 75% 78% 68% 67% Return on invested capital 11% 12% 13% 14% Inflation indexation 75% 75% 80% 85% Highly resilient business, with approximately 90% of our FFO regulated
Slide 56: …while providing unmatched diversification…
2 …while providing unmatched diversification… Data 2018 2024 Data Transmission Storage Regulated Transmission & Distribution 4% 10% ~30 +45 7% 8 Midstream Commercial & Residential 17% Distribution Businesses Businesses Sub segments 21% 5 2 ~80% 13% Rail 22% 6% Businesses Businesses FFO from OECD Dive
Slide 57: …record levels of embedded organic growth…
2 …record levels of embedded organic growth… Capital Backlog +$12 ($B) Shadow Backlog ~$8 $6 Current Backlog $2 $2 2018 2020 2022 Current Potential 57
Slide 58: …and significant embedded gains in our data center platforms
2 …and significant embedded gains in our data center platforms • Established a leading development platform globally • Attractive return profile with 300–400 bps of development spread • Expect to sell-down 1.7 GW of stabilized sites over the next five years • FFO per unit is expected to increase by a
Slide 59: We have significant growth ahead of us from asset rotation
3 We have significant growth ahead of us from asset rotation Our playbook: Buy great businesses Create value through Sell de-risked businesses with downside protection operations and finance at accretive valuations efficiently Proven track record has resulted in a 3–4% return premium on asset rotatio
Slide 60: We expect to generate significant proceeds in the coming years…
3 We expect to generate significant proceeds in the coming years… $5-6B 19% ~2.5x Proceeds in the Combined Multiple of next two years IRR (USD) capital 60
Slide 61: …that will get redeployed into sectors requiring significant capital
3 …that will get redeployed into sectors requiring significant capital AI Infrastructure Industrial Carveouts Electric and Gas Utilities Capital needs have reached all-time highs, which allows experienced and scaled investors to earn premium returns 61
Slide 62: Today is a historically great entry point for investors
Today is a historically great entry point for investors 62
Slide 63: BIP offers attractive relative value compared to the utility sector…
BIP offers attractive relative value compared to the utility sector… Sector1,2 BIP1 ~3% Dividend yield ~5% ~4% Dividend growth 5-9% Low Degree of diversification High High Exposure to consumer Low 1. As of September 20, 2024 2. Based on the S&P 500 Utilities Index 63
Slide 64: …while offering investors an entry point well below historical levels
…while offering investors an entry point well below historical levels P/AFFO Multiple1 16.5x 16.0x 15.5x 14.8x 14.1x 2024 3-Year 5-Year 10-Year Since Inception 1. 2024 based on the closing price of BIP on September 20, 2024, and AFFO is based on Q2 2024 YTD results annualized; the remaining prices ar
Slide 65: Key takeaways
Key takeaways Successful year is underway Capital markets are providing many opportunities to lower our cost of capital Evolving trends in digitalization are expanding our investment perimeter The outlook for our business is excellent! 65
Slide 66: Q&A
Q&A
Slide 67: Thank You
Thank You
Slide 68: Notice to Recipients
Notice to Recipients All amounts are in U.S. dollars unless otherwise specified. Unless uncertainties and other factors which may cause our actual results, IMPORTANT NOTE REGARDING NON-IFRS FINANCIAL MEASURES otherwise indicated, the statistical and financial data in this presentation performance or
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