Infratil Limited · NZX:IFT
Infratil — Investor Day (April 2018)
18 slides from Infratil's investor day presentation, April 2018
Slide 1: Infratil Portfolio Strategy
Infratil Portfolio Strategy Paul Newfield, CIO Infratil Investor Day April 2018
Slide 2: Bringing you inside the Infratil Portfolio Strategy Process
Bringing you inside the Infratil Portfolio Strategy Process Taking a portfolio-wide view to maximise risk-adjusted returns • IFT Investor Day is the culmination of our annual investment strategy review process • Presentations today aimed to provide greater insight into the performance and prospects
Slide 3: The Infratil Portfolio Strategy Process
The Infratil Portfolio Strategy Process Prioritising capital across an option-rich portfolio Macro & Market Conditions IFT’s Strategic Purpose Overall Portfolio Portfolio Review Positioning Capacity and Cashflow & Opportunity Prioritisation Capital Allocation Choices Existing Platforms, Proprietary
Slide 4: Macro & Market Environment
Macro & Market Environment Developed economies recovering, but long term growth capacity remains constrained OECD Real GDP Growth Unemployment – Four largest advanced economies % change from year earlier % of labour force 5.0 12 4.5 4.0 11 3.5 3.0 10 2.5 2.0 9 1.5 1.0 8 0.5 0.0 7 -0.5 -1.0 6 -1.5 Ѳ
Slide 5: Macro & Market Environment: Interest rate outlook starting to turn
Macro & Market Environment Interest rate outlook starting to turn Changing Interest Rate Expectations since the GFC US Federal reserve rate and forward curves as at 1 Jan each year (2007-2018), % 6 5 4 3 2 Actual fed rate Forward curve at 1 Jan each year 1 Actual fed rate - LTM 0 Jan 2010 Jan 2015 J
Slide 6: Macro & Market Environment: US Pressure Cooker Economy
Macro & Market Environment Last year we flagged our fear of a US “Pressure Cooker Economy”, all the ingredients are now in place Fiscal Populist Stimulus Politics Tax Cuts Protectionism Aging Population Defence Spend Stagnant Productivity Immigration Restrictions Infrastructure Spend 6 INFRATIL INVE
Slide 7: Macro & Market Environment: Rising nationalism & interventionism
Macro & Market Environment Rising trend of nationalism & interventionism 7 INFRATIL INVESTOR DAY 2018
Slide 8: The flow of capital into infrastructure shows no sign of abating
The flow of capital into infrastructure shows no sign of abating Institutions increasing allocations, a mountain of dry powder is forming Unlisted Infrastructure Fund Dry Powder (excludes Direct Investors) Total World ($bn) 160 161 152 +10.3% p.a. 109 105 109 84 73 66 64 68 2008 2009 2010 2011 2012
Slide 9: However deal flow is declining as major privatizations dry up
However deal flow is declining as major privatizations dry up Decline particularly notable in Australian core infrastructure Aggregate infrastructure deal value Total World ($bn) -28.3% 470 390 334 337 278 267 259 248 187 201 61 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2018 9 Source: Pre
Slide 10: Macro and market conditions: Summary
Macro and market conditions: Summary Observations IFT Implications • Short term, stimulus-driven growth • Manage IFT equity allocation aggressively • Increasing short term pressure on rates • Term out debt positions • Longer term growth constrained by • Prioritise embedded options within existing de
Slide 11: Infratil's Strategic Purpose: Excess Returns from Growth Infrastructure
Infratil’s Strategic Purpose: Excess Returns from Growth Infrastructure Recap: Our Definition of “Growth Infrastructure” • An “idea that matters” • Solving long term needs Secular growth • Demographic, economic & drivers technological megatrends Growth Infra Proprietary • Barriers to entry • Expansi
Slide 12: Capacity and Cashflow
Capacity and Cashflow IFT’s core assets providing balance sheet strength and cashflows to support reinvestment CORE CASH GENERATIVE ASSETS Core assets Core assets support dividends generate >$150m and debt service pa of free cash Renewables Eldercare Data Emerging Platform Platform Infrastructure Pl
Slide 13: Capacity & Cashflow: Prudent Management of IFT Balance Sheet
Capacity & Cashflow: Prudent Management of IFT Balance Sheet Current gearing headroom provides opportunity for further investment Infratil debt maturity profile • Maintaining IFT balance sheet capacity NZ$m – $269 million (excluding ECGD) of undrawn bank facilities and $250+ million in cash 600 – Ne
Slide 14: Existing platforms presenting proprietary investment options
Existing platforms presenting proprietary investment options Multi-year programme of option development is now bearing fruit CORE CASH GENERATIVE ASSETS Material pipeline of Continue R&D on investment options emerging platforms across existing - Essential to remain platforms ahead of market (>$1b ov
Slide 15: Existing Platforms: Renewable Energy
Existing Platforms: Renewable Energy IFT’s established positions place it ahead of the pack Tilt and Longroad offer attractive access points… …to the most sought after infrastructure asset class % of investors specifically targeting each sub-sector • Renewable energy is the most active infrastructur
Slide 16: Existing Platforms: Data Infrastructure
Existing Platforms: Data Infrastructure Data Centres increasingly in the cross-hairs of infrastructure investors Risk/Return attributes increasingly understood… …And valuation metrics are rising accordingly Australian data centre operator NTM EV/EBITDA(R)1 multiples (x) • “Data Centres: Essential in
Slide 17: IFT Portfolio Positioning & Capital Allocation
IFT Portfolio Positioning & Capital Allocation Attractive set of investment options will force tough capital allocation calls • IFT portfolio is well set to deliver excess returns – Strong cashflow generation and capacity for new investment – New platforms delivering high returning proprietary optio
Slide 18: IFT Portfolio Strategy: Ultimate Focus on Shareholder Returns
IFT Portfolio Strategy: Ultimate Focus on Shareholder Returns Recognising the need for portfolio simplification, while sowing seeds for future value • Small assets struggle for recognition within the IFT share price – Implies a tightening of the portfolio – Growth platforms will always start small,