Brookfield Infrastructure Partners Lp Limited Partnership · NYSE:BIP
Brookfield Infrastructure Partners Lp Limited Partnership — Brookfield Infrastructure Partners — Investor Day (2023)
65 slides from Brookfield Infrastructure Partners Lp Limited Partnership's investor day presentation, 2023
Slide 1: Brookfield Infrastructure Partners
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Slide 2: Agenda
Agenda 01 Year in Review 02 How the Current Environment Is Shaping Our Business Strategy 03 Optimizing Organizational Effectiveness 04 Digitalization: Data Center Platform Spotlight 05 Differentiated Full-Cycle Investment Strategy 06 Closing Remarks
Slide 3: Year in Review
Year in Review Sam Pollock, Chief Executive Officer
Slide 4: Successful execution of our 2023 strategic priorities
Successful execution of our 2023 strategic priorities Strong financial Demonstrated Opportunistic position and capital recycling deployment above results throughout cycles target returns 4
Slide 5: On track to deliver solid growth…
On track to deliver solid growth… Q2 YTD Annualized Run-Rate FFO per Unit FFO per Unit 10% ~$3.05 Growth 13% Growth $1.44 $1.31 $2.71 2022 2023 2022 Q4 20231 1. Expected Q4 2023 FFO per unit annualized 5
Slide 6: …and continue our 14-year history of distribution increases
…and continue our 14-year history of distribution increases 8% Distributions per unit CAGR $1.53 $0.69 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F1 2023 distribution increase of 6% is supported by a conservative payout ratio of 68%2 1. 2023F distribution based on YTD June 30, 2023 distri
Slide 7: Maintaining our commitment to a strong balance sheet
Maintaining our commitment to a strong balance sheet BBB+ 90% $2.3B Investment-grade Long-term, fixed Available rated by two agencies rate debt1 liquidity 1. Excludes (i) most revolving and capital expenditure facilities and (ii) BRL denominated financing given limited availability of fixed rate deb
Slide 8: Fully funded our 2023 growth through asset sales and BIPC shares
Fully funded our 2023 growth through asset sales and BIPC shares Capital Raised Growth $2.8B $0.9B ~$0.5B ~$0.9B ~$1.2B ~$2.8B $2.0B $1.9B ~$2.6B ~$1.9B ~$0.9B Asset Sales BIPC Shares Transport Data Backlog 8
Slide 9: Demonstrated our ability to achieve strong returns through asset sales
Demonstrated our ability to achieve strong returns through asset sales U.S. New Zealand U.S. Natural Gas Pipeline Integrated Data Distribution Gas Storage 18% IRR / 2.8x MoC 31% IRR / 2.6x MoC 15–21x EBITDA multiples 9
Slide 10: The 'Three Ds' driving growth
The ‘Three Ds’ driving growth Digitalization Deglobalization Decarbonization Trillions of dollars required across the ‘Three Ds’, creating strong tailwinds for infrastructure investment 10
Slide 11: Exceeded our annual deployment target
Exceeded our annual deployment target Triton International Compass Datacenters Data4 BIP investment: ~$1.2 billion BIP investment: ~$375 million BIP investment: ~$475 million Expected close1: Sept 2023 Expected close1: Sept/Oct 2023 Closed: Aug 2023 1. Subject to customary closing conditions 11
Slide 12: How the Current Environment Is Shaping Our Business Strategy
How the Current Environment Is Shaping Our Business Strategy
Slide 13: Current 'lay of the land'
Current ‘lay of the land’ Higher Elevated Lower economic interest inflation growth rates Large infrastructure Scarcity of Enthusiasm capex cycle capital for artificial intelligence 13
Slide 14: The broader economic backdrop affects our strategy in three ways
The broader economic backdrop affects our strategy in three ways Operational Investment Corporate perspective posture and finance capital allocation 14
Slide 15: Operational perspective
Operational perspective Most Impactful Factors Elevated Lower economic Enthusiasm for inflation growth artificial intelligence Current Posture: Adapt to Current Environment Focus on margins and optimization Leverage advancements in AI 15
Slide 16: Investment posture and capital allocation
Investment posture and capital allocation Most Impactful Factors Higher interest Scarcity of Large infrastructure rates capital capex cycle Current Posture: Invest Boldly and Pursue Higher Risk-Adjusted Returns Invest for value in platform investments New investments underwritten at 15%+ IRRs 16
Slide 17: Corporate finance
Corporate finance Most Impactful Factors Higher interest Elevated Lower economic Scarcity of rates inflation growth capital Current Posture: Execute Differentiated Full-Cycle Investment Strategy Build platforms to enhance growth and maximize exit values Diversified asset base allows for best executi
Slide 18: Optimizing Organizational Effectiveness
Optimizing Organizational Effectiveness Anita Dusevic Oliva, Operating Partner
Slide 19: Artificial intelligence will significantly enhance the results of our operations-oriented approach
Artificial intelligence will significantly enhance the results of our operations-oriented approach to create value for shareholders
Slide 20: AI will provide two primary benefits to our business
AI will provide two primary benefits to our business Revenue Generation Margin Enhancement • Leverage large amounts of customer data • Transform how businesses are run today across our 45 distinct businesses • Deliver real-time data on global logistics, • Automate back-office processes customer pref
Slide 21: AI in action: Residential decarbonization platform automation
AI in action: Residential decarbonization platform automation HomeServe North America Call Center Automation Opportunity September 2021 April 2022 Digital assistant Fully automated launched claims processing 45% 3.6 Million Annual Calls 55% June 2021 October 2021 Customer recognition Partially autom
Slide 22: AI in action: Automation progress
AI in action: Automation progress 25% 4 Annual Repair Calls 20% Percentage of Calls Automated 15% 10% 45% 1.6 Million Annual Calls 5% 0% Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 22
Slide 23: AI in action: Automation results
AI in action: Automation results Average Sales, Upgrades Call Time and Retention Rates 15-20% ~25% Reduction Increase Before1 After Before1 After 1. Based on the 5-year historical average prior to the implementation of AI 23
Slide 24: AI in action: The larger opportunity to expand and accelerate our growth
AI in action: The larger opportunity to expand and accelerate our growth 1.1 2.0+ Average products Average products per customer per customer 10.5M 2.0 3.0+ Global residential Average policies Average policies infrastructure customers per customer per customer 24
Slide 25: Our continued focus on people and processes to improve organizational effectiveness
Our continued focus on people and processes to improve organizational effectiveness remains critical to creating shareholder value
Slide 26: A well-established approach to improving organizational effectiveness
A well-established approach to improving organizational effectiveness Reduce layers and Focus on strategic Create clear P&L Set the tone ‘from eliminate bureaucracy priorities accountability the top’ We have built successful infrastructure businesses for two decades predicated on these four key pill
Slide 27: Reduce layers and eliminate bureaucracy
Reduce layers and eliminate bureaucracy Remove non-value-add Fix inefficient Avoid management layers processes bureaucracy Case Study: Inter Pipeline Organizational Structure Before After ~1,800 Employees ~1,250 Employees Eight Layers Six Layers CEO CEO Level 1 Level 1 Level 2 Level 2 Level 3 Level
Slide 28: Focus on strategic priorities
Focus on strategic Identify requirements to achieve strategic priorities priorities Eliminate all work not needed for success Assess the use of consultants/contractors Enwave, Canada 28
Slide 29: Create clear P&L accountability
Create clear P&L accountability Eliminate shared Hold P&L leaders Tie compensation plans services accountable to P&L targets Case Study: French Telecom Operation (‘TDF’) Before After One profitability center and Distinct businesses and single management team management teams Management Telecom Fiber
Slide 30: Set the tone 'from the top'
Set the tone ‘from the top’ The Owner’s Mindset: A CEO’s Core Focus What we see What we want Delegation of responsibility Strategy Delegation of execution Corporate vs. operations split culture HR & Culture One team, one consistent culture Absent in the field Health & Safety Present in all business
Slide 31: Significant upside for Brookfield Infrastructure
Significant upside for Brookfield Infrastructure Revenue generation Operational efficiency Margin enhancement Proprietary intelligence Exit value improvement 31
Slide 32: Digitalization: Data Center Platform Spotlight
Digitalization: Data Center Platform Spotlight Udhay Mathialagan, Managing Director and Global Data Center Group CEO
Slide 33: The Future of Digitalization
THE FUTURE OF DIGITALIZATION Watch Video —
Slide 34: Data centers are an attractive asset class…
Data centers are an attractive asset class… Critical Highly Contracted Creditworthy Strong Growth Infrastructure Cash Flows Counterparties Profile Backbone of the Weighted average Serving the largest Industry tailwinds digital economy contract term of hyperscale created by the cloud 10 years custome
Slide 35: …that makes excellent platform investments
…that makes excellent platform investments Ongoing stream of organic Strategic partnerships with highly growth opportunities creditworthy counterparties Embedded capital recycling Significant industry tailwinds opportunities Economies of scale Highly financeable asset class 35
Slide 36: Investment discipline sets the foundation for platform value creation
Investment discipline sets the foundation for platform value creation Bold Strong Platform Investments Returns Potential Two large tuck-in acquisitions in a Expected returns above our Upside from uncontracted land period of market dislocation 12-15% target bank and self-funding structure 36
Slide 37: Today, we own and operate a leading global data center platform
Today, we own and operate a leading global data center platform Canada U.K. Germany Poland United States France South Korea $1.5B Spain Italy Invested capital Israel Mexico 485 MW Colombia India Operating capacity Brazil 905 MW Australia Contracted and Chile reserved capacity 2,300+ MW New Zealand T
Slide 38: Transformational growth of our data center platform…
Transformational growth of our data center platform… ~$135M ~1,700 MW ~1,250 MW ~$30M ~800 MW 485 MW Current 2024F 2025F 2026F Operational Capacity1 NTM FFO2 1. Gross operating capacity on a 100% basis 2. Brookfield Infrastructure’s next twelve month FFO on a proportionate basis 38
Slide 39: …which has been significantly de-risked
Secured …which has been Land & Power significantly de-risked Highly Contracted Modular Design Data4, France 39
Slide 40: Strong incremental development potential…
Strong incremental development potential… Operational Capacity1 Development Potential Planned Growth 2,300+ MW ~1,700 MW 485 MW Current 2026F 2028F 1. Gross operating capacity on a 100% basis 40
Slide 41: …combined with a self-funded structure…
…combined with a self-funded structure… Sell operating assets To fund the platform buildout ~9-12% IRRs ~15-17% IRRs 20%+ IRRs Ability to leverage our proven capital recycling track record to generate 20%+ returns 41
Slide 42: …creates significant platform value
…creates significant platform value $5B+ ~3.5–4x MoC $1.5B 2023 Terminal 7–10 Year Hold Period Invested Capital Value 42
Slide 43: Differentiated Full-Cycle Investment Strategy
Differentiated Full-Cycle Investment Strategy David Krant, Chief Financial Officer
Slide 44: As part of our annual asset rotation strategy, we are buyers and sellers
As part of our annual asset rotation strategy, we are buyers and sellers throughout market cycles
Slide 45: Execution tailored to the prevailing market conditions
Execution tailored to the prevailing market conditions General Market Environment ‘Buyer’s Market’ Capital scarcity Lower fundraising Larger deal sizes ‘Seller’s Market’ Lower growth outlook Capital flowing freely Significant dry powder Deals of all sizes Strong growth outlook 45
Slide 46: Achieved 12-15%+ returns in all cycles by acquiring two types of businesses
Achieved 12-15%+ returns in all cycles by acquiring two types of businesses Acquiring brownfield Buying platforms and assets—existing greenfield developments infrastructure with attractive that have lower current going-in yield and some operating asset bases but growth opportunities outsized growth
Slide 47: We have been (and always will be) discounted cash flow investors
We have been (and always will be) discounted cash flow investors Brownfield1 Platform/Greenfield1 7–10% + 2–5%+ OR 3–5% + 7–9%+ Going-in Growth/Capital Going-in Growth/Capital yield appreciation yield appreciation 12–15%+ (Levered, after-tax IRRs) 1. Percentages are illustrative in nature 47
Slide 48: We like both types of businesses: Brownfield investments (Triton)
We like both types of businesses: Brownfield investments (Triton) Brownfield Triton Characteristics International Going-in FFO accretion Significant Going-in yield > 15% Lower given current economic Impact on growth profile Lowers future growth environment Leverage levels Representative Investment g
Slide 49: We like both types of businesses: Platforms (data centers)
We like both types of businesses: Platforms (data centers) Platforms + Greenfield Global Data Characteristics Center Platform Going-in FFO accretion Minimal, if any None Impact on growth profile Raises future growth Significantly higher (35%+ CAGR) Overstated due to minimal Appear high given capex i
Slide 50: Current environment has allowed us to acquire high-growth platforms
During this cycle, the current environment has allowed us to acquire high-growth platforms and development engines for value Historically, most of our investments were in the form of higher-yielding, brownfield infrastructure
Slide 51: We have recently deployed $2.5 billion across five high-quality platforms…
We have recently deployed $2.5 billion across five high-quality platforms… Utility Australian North American & European Metering Last-Mile Fiber Residential Decarbonization North American European Data Centers Data Centers 51
Slide 52: …and now have more platforms than ever before
…and now have more platforms than ever before 10 years ago 5 years ago Today Number of platforms 1 4 9 Countries 2 5 13 Average platform growth rate 10–15% 10–15% 20%+ Percent of invested capital <5% 5–10% 25%+ 52
Slide 53: These nine platform investments represent ~25% of our invested capital
These nine platform investments represent ~25% of our invested capital but 5% of our 2023 EBITDA— they will meaningfully increase as we deliver our growth plans
Slide 54: Recent platform investments have low execution risk…
Recent platform investments have low execution risk… 100% ~$1.5B ~80% Inflation Potential capital Backlog contracted indexation backlog at acquisition Recent platform investments include utility metering, Australian last-mile fiber and our North American & European data centers 54
Slide 55: …and highly visible growth in the near-to-medium term
…and highly visible growth in the near-to-medium term Brookfield Infrastructure EBITDA ($ Million) $175 $335 $25 $50 $15 $150 $35 $10 Utility Residential Australian North American & Metering Decarbonization Last-Mile Fiber European Data Centers 2023F 2028F 55
Slide 56: Strong organic tailwinds
That will provide significant organic growth tailwinds for our business overall Strong organic Higher values tailwinds on exit 56
Slide 57: Our large-scale and highly diversified portfolio creates flexibility
Our large-scale and highly diversified portfolio creates flexibility to maximize sale proceeds throughout cycles
Slide 58: Diverse sources of capital provide added flexibility…
Diverse sources of capital provide added flexibility… Sale of assets from Partial selldown of Divestiture of a Optimization of within an existing a platform—different platform—largest existing capital platform—smaller buyer group, retain source of capital, can structure—lowest size, focused buyers c
Slide 59: …and meaningful accretion as we expect to continue to invest above our 12-15% target
… and meaningful accretion as we expect to continue to invest above our 12-15% target $2B ~9-11% 4 Low Target Expected cost Covered Future proceeds of capital sectors growth rates 59
Slide 60: Highly visible FFO per unit growth
Highly visible FFO per unit growth 11% 12%+ FFO per unit FFO per unit CAGR CAGR $2.95–$3.00 $2.71 $2.09 $1.63 $0.96 2012 2016 2020 2022 2023F 1–3 Year Outlook 60
Slide 61: Closing Remarks
Closing Remarks Sam Pollock, Chief Executive Officer
Slide 62: BIP is your go-to Grow-tility!
BIP is an excellent investment choice with strong growth prospects Interest rates have peaked Record backlog and organic growth prospects Prevailing market conditions allow for accretive new investments Current trading yield represents most attractive entry point since 2020 BIP is your go-to Grow-ti
Slide 63: Brookfield
Brookfield
Slide 64: Thank You
Brookfield Thank You es ee tot t+ t+ + + + + + $+ + + + Ft t+ HH Het te + + HoH HH HHH HH HH HH HH HH HH HH HEE a a + + + + toto + + + t+ + + + + 4 + + t+ + + tot t+ tt + t+ tt tt tee et tet ee tte et . ++eeeeeeeeeeterrermrermrmrdehUmvhhUcvhhUmvhhUmvh
Slide 65: Notice to Recipients
Notice to Recipients All amounts are in U.S. dollars unless otherwise specified. Unless otherwise indicated, statements and information. These beliefs, assumptions and expectations can change refer to throughout this presentation. We define FFO as net income excluding the the statistical and financi
Brookfield Infrastructure Partners — Investor Day (2023) on 6ix