Macquarie Korea Infrastructure Fund

Transcription

1 Macquarie Korea Infrastructure Fund nd Quarter Asset Management Report Name Macquarie Korea Infrastructure Fund (MKIF) Period Quarter 1 (1 April June 2017) Prepared by Macquarie Korea Asset Management Co., Ltd. (MKAM) Fund code: WS:MSIM_Seoul:917010:v1

2 Page 2 of 17 Important notice Under the Financial Investment Services and Capital Markets Act (the Act ), Macquarie Korea Infrastructure Fund ( MKIF ) is required to upload an Asset Management Report at MKIF website, in the form and containing specific information set out in the Act, on a quarterly basis. This Asset Management Report has been prepared by MKIF in compliance with its statutory obligations. Disclaimer MKIF and Macquarie Korea Asset Management Co., Ltd. ( MKAM ), are not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and its obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of MKIF/ MKAM. Neither MKIF, nor any member of the Macquarie Group companies, including MKAM, guarantees the performance of MKIF, the repayment of capital or the payment of a particular rate of return on MKIF securities. General advice warning The contents of this report do not constitute an offer, invitation or recommendation for the subscription or purchase of securities. It does not take into account the investment objectives, financial situation and particular needs of the investor. Before making an investment in MKIF, the investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary.

3 Page 3 of 17 Contents 1. General Report Overview Asset Details Management performance and term performance Overview Management plan Management performance Profit and Loss summary Details of assets Asset portfolio Top ten invested assets MKIF s asset portfolio details Registered asset managers Registered infrastructure asset managers Change in registered infrastructure asset managers Cost summary Fees to service providers Total expense ratio Invested asset transactions and debt facility Equity transactions Equity turnover ratio during the past three quarters Loan sales Loan injections Debt facility status Corporate bond status Notice Appendix I. MKIF Board of Directors Appendix II. Summary of Financial Statements... 15

4 Page 4 of General Report 1.1 Overview Under the Financial Investment Services and Capital Markets Act (the Act) Investment Grade: 4 Fund name Fund type Fund code* Date of incorporation 12 December 2002 Date of registration 26 December 2002 Date of listing 15 March 2006 Financial year end Fund maturity Asset manager Sales agents Custodian Fund administrator Board of directors ^ Key staff of MKAM ^ MKIF profile Macquarie Korea Infrastructure Fund (MKIF) Investment company/special asset fund/closed-end with an option for new share issuance 31 December every year Perpetual (until the occurrence of dissolution events defined in the Articles of Incorporation of MKIF) Macquarie Korea Asset Management Co., Ltd. (MKAM) Shinhan Investment Corp., Samsung Securities Co., Ltd., Hanwha Investment & Securities Co., Ltd., Kyobo Securities Co., Ltd., Yuanta Securities Korea Co., Ltd. Korea Securities Finance Corporation (KSFC) Hana Investors Service Co., Ltd. Corporate Director: MKAM Supervisory Directors: Kyung Soon Song, Dae-Hee Yoon and Woo Young Jung Chul Hum Paik (CEO) Jason Pak (COO / MKIF Management) Namwook Choi (Fund Management) Jinwook Park (Risk Management) Young Ju Ahn (Compliance) DK Kim (Legal) MKIF is a leading private sector infrastructure investor in Korea and has the largest portfolio of infrastructure assets in Korea that have been, or are being, constructed under the Act on Public-Private Partnerships in Infrastructure (PPI Act). MKIF was established in December 2002 with a mandate to invest in entities that construct or operate infrastructure businesses such as toll roads, bridges and tunnels in Korea. MKIF invests in these infrastructure businesses through equity and debt. MKIF is focused on generating profits from its investments and distributing these profits to its shareholders. MKIF is proud to be making a significant contribution to Korea s infrastructure development. MKIF is managed by MKAM. MKAM is a subsidiary of Macquarie Infrastructure and Real Assets (Europe) Limited, a member of the Macquarie Group Limited. * Fund code generated by Korea Financial Investment Association (KOFIA) ^ See Section 4. Registered Asset Managers and Appendix I. MKIF Board of Directors for more information

5 Page 5 of Asset Details Under the Act, MKIF is required to report the net asset value per share (NAV per share) of its portfolio. The total net asset value of MKIF s portfolio is calculated by subtracting total liabilities from total assets of MKIF. MKIF s assets include its equity and debt investments in concession companies, cash and deposits and other investment securities. The net asset value per share of MKIF is calculated by dividing total net asset value by the number of outstanding shares. The Collective Investment Property Appraisal Committee of MKAM has chosen to adopt the acquisition cost as its assessment of fair value for the unlisted equity investments under the Act and accounting principles generally accepted in Korea (K-GAAP). In addition, the debt investments are measured at amortised cost under the Act and K-GAAP. The calculation of the NAV per share of MKIF is set out in the table below. For the purposes of this calculation, asset and liability information is based on the balance sheet of MKIF, which is attached as Appendix II. (Unit: KRW, share) Type Q Q % Change Total Assets (A) 2,061,727,604,543 2,056,321,245, % Total Liabilities (B) Net Asset Value (C=A-B) Shares (D) NAV per share (E=C/D) + 378,602,728, ,095,140, % 1,683,124,876,156 1,712,226,104, % 331,459, ,459, % 5, , % + NAV per share of MKIF is calculated by dividing total net asset value by the number of outstanding shares. However, as MKIF is listed on the Korea Exchange, its shares are traded at share price. Distribution payment (during the Second quarter) (Unit: KRW, share) Date of Declaration Distribution Amount (KRW Million) Balance after Payment (Shares) Before declaration NAV per share After declaration Remarks

6 Page 6 of Management performance and term performance 2.1 Overview Established on 12 December 2002, MKIF is a leading private sector infrastructure investor in Korea under the PPI Act and governed by the Act. MKIF is mandated to invest in concession companies that construct or operate infrastructure assets through equity and debt. MKIF is focused on generating profits from its investments and distributing these profits to its shareholders. As of 31 March 2017, MKIF has committed to invest in 11 toll roads and one port with a total investment commitment of KRW 1,668.7 billion. 2.2 Management plan MKIF is focusing on investments in loans to, and unlisted equity of, concession companies that operate infrastructure assets under concessions from Korean central, provincial or city governments throughout the country. Target assets for infrastructure investment in Korea have historically been concessionaires operating toll roads, bridges, and tunnels, etc. The Company is also considering investment in entities conducting facilities projects defined under Article 2 Subparagraph 1 of the PPI Act. Our primary strategic objective is to invest in entities that develop and/or operate Infrastructure Assets and to generate attractive returns to our shareholders through capital growth and cash distribution. 2.3 Management performance The table below sets out the historical NAV (including the distribution paid) for MKIF. As explained above and given that the majority of MKIF s assets are held at their acquisition cost, the net asset value is not representative of changes in the value of the MKIF portfolio. A. Short-term performance (Unit: %) Type 3 Months 6 Months 9 Months 12 Months MKIF Comparative Index + + There is no comparable index available because MKIF is the only listed infrastructure fund in Korea with publicly available NAV data. Performance quoted above is historical and does not guarantee future performance. N/A B. Long-term performance (Unit: %) Type 1 Year 2 Years 3 Years 5 Years MKIF Comparative Index ^ ^ There is no comparison index available because MKIF is the only listed infrastructure fund in Korea with publicly available NAV data. Performance quoted above is historical and does not guarantee future performance. 2.4 Profit and Loss summary The table below sets out the profit and loss incurred by MKIF in its P&L during the Quarter, in comparison with any profit and loss from the previous quarter. Type Equity Loans Dividend Income N/A (Unit: KRW million, %) Short-term Facilities & Deposit Other Assets Total Profit (Loss) Q , ,995 Q ,471 54, ,998

7 Page 7 of Details of assets 3.1 Asset portfolio MKIF s investment portfolio consists of equity, loans, cash and deposits and other assets. Type Equity (unlisted) Loans + (Unit: KRW million, %) Short-term facilities & Deposit Other assets ^ Total assets KRW 509,468 1,161,633 17, ,582 2,056,321 Composition Ratio Include loans to concession companies ^ Other assets: interest receivable, other receivables and prepaid expenses 17.87% 24.78% 0.86% Equity(Unlisted) Loan Short-term facilities & Deposit Other asset 56.49% 3.2 Top ten invested assets (Unit: KRW million, %) Rank Type Name Acquisition Value + Composition Ratio ^ Subordinated loan Subordinated loan Senior loan Subordinated loan Equity (unlisted) Subordinated loan Subordinated loan Subordinated loan Equity (unlisted) Equity (unlisted) BNCT Co., Ltd. Cheonan-Nonsan Expressway Co., Ltd. Kwangju Beltway Investment Co., Ltd. Gyungsu Highway Co., Ltd. Cheonan-Nonsan Expressway Co., Ltd. Incheon Bridge Co., Ltd. Seoul-Chuncheon Highway Co.,Ltd. MCB Co., Ltd. Private Infrastructure Investment Korea BNCT Co., Ltd. 193, , , , , , , , , , Under K-GAAP and the Act, MKIF records the value of its equity investments in concession companies at their acquisition costs including transaction costs ^ Ratio refers to the contribution to total assets

8 Page 8 of MKIF s asset portfolio details A. Equity securities (unlisted) (top five assets) (Unit: Share, KRW million, %) Name Cheonan-Nonsan Expressway Co., Ltd. Private Infrastructure Investment Korea No. of Shares Percentage Interest Acquisition Value (A) Appraisal Value (B) + Gain/ Loss (B)-(A) 17,550,000 60% 93,815 93,815-14,266, % 76,887 76,887 - Composition Ratio ^ BNCT Co., Ltd. 13,284,000 30% 67,048 67, Gyungsu Highway Co., Ltd. 10,319, % 52,095 52, Seoul-Chuncheon Highway Co., Ltd. 9,714,000 15% 49,439 49, Under K-GAAP and the Act, MKIF records the value of its equity investments in concession companies at their acquisition costs including transaction costs ^ Ratio refers to the contribution to total assets B. Equity securities (unlisted) (more than 1% of total issued shares) (Unit: Share, KRW million, %) Name Cheonan-Nonsan Expressway Co., Ltd. Private Infrastructure Investment Korea No. of Shares Percentage Interest Acquisition Value (A) Appraisal Value (B) + Gain/ Loss (B)-(A) Compositio n Ratio ^ 17,550,000 60% 93,815 93, ,266, % 76,887 76, BNCT Co., Ltd. 13,284,000 30% 67,048 67, Gyungsu Highway Co., Ltd. 10,319, % 52,095 52, Seoul-Chuncheon Highway Co., Ltd. 9,714,000 15% 49,439 49, Soojungsan Investment Co., Ltd. 1,114, % 47,248 47, MCB Co., Ltd. 7,955,780 70% 33,925 33, Kwangju Beltway Investment Co., Ltd. 6,610, % 33,050 33, Kwangju Ring Road Co., Ltd. 5,775,000 75% 29,495 29, New Airport Hiway Co., Ltd. 3,665, % 25,235 25, Baekyang Tunnel Ltd. 100, % 1,231 1, Woomyunsan Infraway Co., Ltd. * 835,200 36% Under K-GAAP and the Act, MKIF records the value of its equity investments in concession companies at their acquisition costs including transaction costs ^ Ratio refers to the contribution to total assets * Woomyunsan Infraway Co., Ltd. completed its capital reduction on 16 January 2009 and on 16 February The value of equity investment in Woomyunsan Infraway Co., Ltd. was recognised as zero because the total proceeds of capital reduction paid to MKIF exceeded the acquisition value of the equity investment. For details, refer to MKIF disclosure on 14 January 2016.

9 Page 9 of 17 C. Loans to concession companies (top five assets) (Unit: KRW million, %) Name BNCT Co., Ltd. (Subordinated loan) Cheonan-Nonsan Expressway Co., Ltd. (Subordinated loan) Kwangju Beltway Investment Co., Ltd. (Senior loan) Gyungsu Highway Co., Ltd. (Subordinated loan) Incheon Bridge Co., Ltd. (Subordinated loan) +These values are accumulated interest receivables Acquisition Value Interest Receivable + Issued Date Maturity Date Guarantee Credit Rating 193, ,570 25/02/ /11/2032 N/A N/A 182,250 68,611 20/05/ /05/2029 N/A N/A 139, /11/ /09/2024 N/A N/A 99,633 10,088 29/10/ /07/2039 N/A N/A 89,378 41,182 12/04/ /07/2026 N/A N/A D. Short term facilities and deposit Name* Banks Deposit amount + Date of Deposit Maturity Date * Each deposit amount exceeding 5% of the Total Assets + This value is the principal ^ Ratio refers to the contribution to total assets N/A Interest Receivable (Unit: KRW million, %) Composition Ratio ^ E. Other assets The other assets are set out in the table below and consist of accrued income. (Unit: KRW million, %) Type Amount Composition Ratio ^ Interest Receivable * 367, * Other assets under the invested assets composition (ex: accrued dividends, accrued income etc), exceeding 5% of the total assets ^ Ratio refers to the contribution to total assets For more information, refer to Quarterly Business Reports and Documents of Settlement of Accounts on the website of KOFIA ( However, the effective dates of the Quarterly Business Reports and Documents of Settlement of Accounts on the website of KOFIA may be different from the effective dates of this report.

10 Page 10 of Registered asset managers 4.1 Registered infrastructure asset managers* MKAM is licensed under the Act to carry out asset management activities for MKIF. As part of its licensing requirements, MKAM is required to employ at least two infrastructure asset management professionals who meet certain qualifications. The following is a list of MKAM s infrastructure asset management professionals who are in charge of MKIF management. Name KOFIA registration number Title Management fund other than MKIF Number of fund(s) Total asset under management Fund with performance fee scheme Number of fund(s) Total asset under management Jason Pak Division Director N/A N/A 1 KRW trillion Jae Woo Jung Senior Manager * According to the Articles of Incorporation of MKIF, MKIF is allowed to pay performance fee to MKAM. 1 KRW billion 2 KRW trillion 4.2 Change in registered infrastructure asset managers Period ^ January 2015 ~ Present March 2016 ~ Present January 2015 ~ March 2016 March 2006 ~ January 2015 January 2008 ~ January 2015 ^ Change in registered asset managers during the past three years. Registered asset managers Jason Pak Jae Woo Jung Jiroo Eoh Johnno Kim Jong Hyuck Park For more information, refer to ad-hoc disclosures on the website of KOFIA ( However, the effective dates of information displayed on the website of KOFIA may be different from the effective dates of information in this report.

11 Page 11 of Cost summary 5.1 Fees to service providers The table below sets out fees paid by MKIF to its service providers. (Unit: KRW million, %) Type Q Q Amount Ratio+ Amount Ratio+ MKIF Management fee 8, , Performance fee* Sales agent fee Custodian fee Administrator fee Total 8, , Other expenses^ Transaction fee Securities transaction Remarks + Ratio refers to fees as a proportion of Net Asset Value ^ Other expenses include fund audit fee, fund settlement fee and other recurring expenditures other than transaction fee * Performance fees are calculated and payable on a quarterly basis in accordance with the Articles of Incorporation of MKIF and the Management Agreement between MKIF and MKAM, the manager of MKIF. There were no performance fees for Q and Q Total expense ratio (Unit: annualised, %) Type Total Expense Ratio* Collective Investment Vehicle Commission Ratio MKIF Q Q * Total Expense ratio refers to a ratio calculated by dividing the total management fee and other expenses borne by the collective investment vehicle by annual average balance of the fund (before deducting the fees and expenses) and represents the total fees and expenses borne by the investor during the management period

12 Page 12 of Invested asset transactions and debt facility 6.1 Equity transactions (Unit: annualised, %) Buy Sell Turnover Ratio+ Shares Amount Shares Amount Q Annualised rate The Turnover Ratio shows frequency level for the equity transactions. The ratio refers to average disposal amounts divided by average retained equity amounts during the period. Provided that the average equity investment is 10 billion and the average equity disposal amount is 10 billion, turnover ratio is 100%. High turnover ratio will increase fund cost. 6.2 Equity turnover ratio during the past three quarters (Unit: %) Q Q Q Loan sales (Unit: KRW million) Name Type Date Amount N/A 6.4 Loan injections (Unit: KRW million) Name Type Date Amount N/A 6.5 Debt facility status (Unit: KRW million) Name Debt facility amounts Limit of the Facility Cumulative to Q Movements in Q Cumulative to Q Shinhan Bank 60,000 28,130 (8,382) 19,748 National Agricultural Cooperative Federation 60,000 28,130 (8,382) 19,748 Woori Bank 40,000 18,754 (5,589) 13,165 Tongyang Life Insurance 40,000 18,754 (5,589) 13,165 Shinhan Life Insurance 30,000 14,065 (4,191) 9,874 KB Insurance 20,000 9,377 (2,793) 6,584 Total 250, ,210 (34,926) 82,284

13 Page 13 of Corporate bond status (Unit: KRW million) Name Par Value Interest rate Issue Date Maturity Date Credit Rating Unsecured Bond Tranche 1-2 (7year) 190, /05/ /05/2018 AA 5 th Electronic Short-term Bond+ 60, /04/ /07/2017 A1 + MKIF issued a new KRW 60 billion electronic short-term bond ( ESTB ) for the purpose of repaying KRW 60 billion 5-year fixed-rate bond maturing on 31 May After the initial issuance, MKIF will revolve the ESTB up to the limit of KRW 60 billion every 3 months subject to MKIF s cash needs. Samsung Securities, as the sole underwriter of the ESTB, will underwrite and place all of the ESTB issued by MKIF for the next 2 years. For details, refer to MKIF disclosure on 26 May Notice Under the Act, MKAM shall prepare this report and upload it on the website of MKIF and KOFIA after confirmation from the Custodian (KSFC). For more information on the website: MKIF KOFIA macquarie.com/mkif

14 Page 14 of 17 Appendix I. MKIF Board of Directors Supervisory directors Name Career Kyung Soon Song Ÿ Founding Representative Director of Korea Expert Consulting Group (KECG) Ÿ External Director of Board, Doosan Bobcat Co., Ltd Ÿ Former non-government Member of International Development Cooperation Committee of the Republic of Korea Ÿ Former Chairman of International Finance Subcommittee, Financial Sector Development Review Committee of the Korean Government Ÿ Former senior staff member of World Bank Ÿ Former Chief Operating Officer of Nomura Project Finance International Limited Ÿ Former member of Advisory Board, Korea International Cooperation Agency (KOICA) Dae Hee Yoon Ÿ Chair Professor in Economics, Gachon University Ÿ Attorney-at-law, Senior Advisor of Yulchon Ÿ Former Minister of the Government Policy Coordination Office Ÿ Former Senior Secretary of Economic Affairs at Presidential Office Ÿ Former Deputy Minister for Planning and Management at Ministry of Strategy and Finance Ÿ Former Head of the Knowledge Sharing Program (KSP) promoted by the Korean government Woo Young Jung Ÿ Attorney, Lee & Ko Ÿ Adjunct Professor, Graduate School of Law, Korea University Ÿ Outside Director, Hanjin Shipping Ÿ Arbitrator, Korean Commercial Arbitration Board Ÿ Committee Member, Policy Advisory Committee, Ministry of Oceans and Fisheries Ÿ Legal Advisor, Industrial Bank of Korea Ÿ Legal Advisor, Bank of Korea Corporate director MKAM Name Career Chul Hum Paik Ÿ Representative Director of MKAM Ÿ Headed the Financial Products division of Shinhan Macquarie Financial Advisory from 2001 to 2006 Ÿ Joined Shinhan Bank in 1993, with responsibilities for international banking and investment banking division Jason Pak Ÿ Chief Operating Officer of MKAM Ÿ Lead fund manager of MKIF, responsible for overall portfolio/capital management and investor relations Ÿ Joined Macquarie Group in 2003 and spent 4 years on the equity capital market and M&A advisory side with Macquarie Securities Korea Ltd. Ÿ Worked over 5 years in the Corporate Finance division of KPMG, in Seoul and London on the M&A advisory side Namwook Choi Ÿ Head of Private Concession and Real Estate team of MKAM Ÿ Worked over 10 years mainly in Investment Banking Division of Samsung Securities, having various roles in structured finance and IB

15 Page 15 of 17 Appendix II. Summary of Financial Statements Statements of Financial Position As of 30 June 2017, As of 31 March 2017 and 30 June 2016 (Unit: KRW million) 30 June March June 2016 Assets Invested assets 1,688,739 1,705,170 1,614,964 Cash & deposits 17,638 28,884 17,346 Loans receivable 1,161,633 1,166,818 1,088,150 Equity securities 509, , ,468 Others 357, , ,856 Interest receivables 357, , ,907 Dividend receivables Other receivables 2,642 2,554 2,465 Deferred costs, net 2,877 3,059 3,108 Prepayment 4,857 4,857 3,484 Total assets 2,056,321 2,061,728 2,064,820 Liabilities Operational liabilities 332, , ,386 Bond 249, , ,730 Long-term debt 82, , ,656 Others 11,956 11,569 35,461 Payables Management fee payable 9,271 8,851 9,404 Performance fee payable ,256 Other liabilities 2,679 2,717 2,797 Total liabilities 344, , ,847 Shareholders equity Share capital 1,670,986 1,670,986 1,670,986 Retained earnings (accumulated deficit) 41,240 12,139 (7,013) Total shareholders equity 1,712,226 1,683,125 1,663,973 Total liabilities and shareholders equity 2,056,321 2,061,728 2,064,820

16 Page 16 of 17 Statements of Income For the Quarters Ended 30 June 2017, 31 March 2017 and 30 June 2016 Quarter Ended 30 Jun Quarter Ended 31 Mar (Unit: KRW million) Quarter Ended 30 Jun Revenue 42,995 96,998 44, Interest income 42,906 42,504 44, Dividend Income - 54, Other income Expenses 13,894 13,088 37, Management fee 9,271 8,851 9, Performance fee , Custodian fee Administrator fee Interest expense 3,523 3,701 4, Other expense Net income 29,101 83,910 6,745

17 Corporate Directory Manager of MKIF Macquarie Korea Asset Management Co., Ltd. 9th Floor, Hanwha Building, 109 Sogong-ro, Jung-gu, Seoul, 04525, KOREA Telephone Facsimile MKIF Custodian Korea Securities Finance Corp. 10, Gookjegeumyoongro-8-gil, Yeoungdeungpo-gu, Seoul, 07330, KOREA Telephone Facsimile MKIF Administrator Hana Investors Service Co., Ltd. Han Oe Building 9th Floor, 43 Dadong-gil, Jung-gu, Seoul, 04521, KOREA Telephone Facsimile WS:MSIM_Seoul:917010:v1