Infrastructure and Private Credit AMAFORES / FIAP Conference

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1 Infrastructure and Private Credit AMAFORES / FIAP Conference October

2 Participation in Alternative Assets INSTITUTIONAL INVESTORS BYNUMBER OF ALTERNATIVE ASSET CLASSESINVESTED IN None One Two Three Four Five Six 20% 16% 14% 16% 14% 11% 9% Private Equity 57% PROPORTION OF INSTITUTIONAL INVESTORS ALLOCATING TO EACH ALTERNATIVE ASSET CLASS Hedge Funds 51% Real Estate 61% Infrastructure 36% Private Debt 37% Natural Resources 40% Private Equity Hedge Funds INSTITUTIONAL INVESTORS IN ALTERNATIVE ASSETS BY TARGET ALLOCATION TO EACH ASSET CLASS (AS A% OF AUM) Real Estate Infrastructure Private Debt Natural Resources 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Proportion of Respondents Less than 5% 5-9.9% % % 20% or More INSTITUTIONAL INVESTORS PLANS FORALLOCATIONS IN THELONGERTERM Reduce Allocation Increase Allocation 31% 23% 10% 11% 8% 6% Private Equity Hedge Funds Real Estate Infrastructure Private Debt Natural Resources 15% 19% 36% 48% 53% 62% Source: Preqin Ltd /

3 Infrastructure

4 What is Infrastructure? Sources: McKinsey Bridging Global Infrastructure Gap

5 How is Infrastructure Financed? Assets Vehicles Sources of Capital Operating Entities Public Sector Public Private Partnerships Corporate Sector Joint Ventures Infrastructure Funds Institutional Investors 5

6 Financing the Infrastructure gap Pension funds and other institutional investors likely to play a more significant role in bridging the infrastructure investment gap in the future $2.5 trillion a year invested globally on transportation, power, water, and telecom infrastructure that enables economic activity1 Investment needs to average $3.3 trillion annually (3.8% of global GDP) through 2030 just to support current economic growth projections2 Institutional investment into infrastructure continues to grow but remains low in relation to investment needs as it is still a young emerging private market asset class o Infrastructure fund market estimated currently at $350bn o Growing to $1trillion within the next 5 years3 o The space has been historically dominated by specialist firms and it is now attracting other alternative asset managers (e.g. private equity, real estate) o 2017 has already seen the largest infrastructure funds ever raised by GIP and Brookfield at approx. $15bn each and currently Blackstone is raising what is set to become the largest private market fund ever at $40bn ($100bn leveraged)4 6 1 Source: McKinsey Bridging Global Infrastructure Gap Source: McKinsey Bridging Global Infrastructure Gap Source: Preqin Global Infrastructure Report 2016/17 4 Source: Preqin Quarterly Update Infrastructure, Q1 2017

7 How do institutional investors think about infrastructure? Infrastructure is a diverse and emerging private market asset class Risk / Reward Core Core + Value Add Opportunistic Infrastructure Fund Managers Sub-asset Classes Communications Transportation Energy Water & Waste Project Types Greenfield Brownfield: Infrastructure Assets Liquidity Closed Ended Open Ended Listed Regional NA, EMEA, APAC Developed vs emerging economies Investments across capital structure Debt Equity 7

8 Private Credit

9 Private Credit AuM expected to grow to US $1 trn in

10 Private credit is now an established source of mainstream finance As of March

11 BDC Growth and Economic Impact The Business Development Companies( BDC) industry is growing rapidly. Currently, BDCs have over $80 billion in outstanding loans in middle market businesses. This financing helps businesses expand and create jobs. Growing companies across the country rely on BDCs to finance new capital projects such as land, equipment, and factories. Percentage of middle market companies that expect to add jobs 2Q 17 42% 2Q 16 37% Percentage of middle market companies that reported positive revenue growth 2Q 17 57% 2Q 17 56% Washington $1,114 Oregon $472 California $12,262 Guam $49 Nevada $456 Hawaii $15 Idaho $241 Utah $1,440 Montana $24 Colorado $3,286 Arizona $1,195 New Mexico $219 Alaska $21 Wyoming $137 State by State BDCs Total Exposure (In Millions) North Dakota South Dakota $1 Nebraska $60 Kansas $559 Texas $8,263 Minnesota $2,296 Oklahoma $1,702 Iowa Missouri $805 Wisconsin $705 Arkansas $360 Illinois $4,665 Mississippi $763 Louisiana $828 Michigan $1,060 Indiana $1,634 Kentucky $283 Tennessee $1,833 Alabama $819 Ohio $1,659 New Hampshire $168 Vermont $25 Pennsylvania West $3,940 Virginia Virginia $67 $1,746 North Carolina $1,972 South Carolina $1,089 Georgia $2,958 New York $7,081 Florida $5,632 Maine $76 Massachusetts $3,525 Rhode $174 Island Connecticut $1,381 New Jersey $2,040 District of Columbia $226 Delaware $863 Maryland $968 Source: SBIA BDC Modernization Agenda 2017 Puerto Rico $531

12 Key Attractions of private credit to borrowers are as relevant as ever As of December

13 The US continues to dominate private credit activity As of December

14 Investor Appetite 14 Source: Prequin Sept 2017

15 Investors Satisfaction 15 Source: Prequin Sept 2017

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