Brookfield Infrastructure Partners Investor Update October 2016
Brookfield Infrastructure is one of the largest globally diversified owners and operators of infrastructure assets in the world BROOKFIELD INFRASTRUCTURE PARTNERS SUMMARY Market Symbol NYSE: BIP TSX: BIP.UN Market Capitalization Quarterly Distribution ~$11.3 Billion $0.39 per unit Brookfield Participation ~30% Equity Interest, GP & Manager 1) Based on the closing price on the NYSE as of September 15, 2016 CAPITALIZATION Credit Ratings: S&P BBB+ Consolidated Leverage: 50% Average debt term to maturity: 8 years UNIT PERFORMANCE Annualized Total Return (As at September 15, 2016) 1-Year 5-Year Since Inception BIP (NYSE) 38% 18% 18% BIP (TSX) 37% 26% 23% S&P 500 11% 14% 8% S&P Utilities Index 22% 11% 7% Alerian MLP Index -2% 4% 7% DJB Infrastructure Index* 13% 9% 6% Source: Bloomberg; includes reinvestment of distributions * No dividend reinvestment for the index Peer Group 2
Our objective is to own and operate a globally diversified portfolio of high quality infrastructure assets that will generate sustainable and growing distributions over the long term for our unitholders INVESTMENT HIGHLIGHTS Proven management team and strategy Attractive sector High quality assets Sustainable cash flow Strong financial position Attractive entry point 3
Our strategy is to build a business for all investment cycles Provide predictability of cash flows & Generate growth and inflation protection We have a number of initiatives on the go to deliver on these priorities including the build-out of our Brazilian utilities business 4
Build-out of BIP s Brazilian utilities business 5
Brazil is a key focus for BIP Building a large-scale electrical transmission utility Acquiring a leading natural gas transmission system Investing over $1 billion 6
Reprioritizing utilities from North America to Brazil Drivers N. American utility return expectations at all-time lows Universe of buyers growing Limited organic growth leading to consolidation While at the same time Brazil suffered a negative re-rating (loss of investment grade status) Reduced buyer universe and increasing supply of organic growth to earn outsized returns on a lower risk basis 7
We are well-positioned to execute on our priorities in Brazil We have been in Brazil for over 100 years We have a successful track record of investing on a contrarian basis While the country is experiencing a crisis of confidence Do not believe political/economic crisis will persist Underwriting strong base case returns with upside on re-rating 8
NTS is a compelling investment opportunity 2,000+ km system representing main transportation network for natural gas in Brazil Limited competition given the transaction size and current investor appetite for Brazil Agreement secured through exclusive discussions Brookfield-led consortium acquiring 90% stake for $5.2 billion BIP to invest a minimum of ~$800 million 9
with attractive investment attributes Well-located energy infrastructure assets High-quality, recently built assets with high scarcity value Systems built in last 10 years Low maintenance capital of ~3% of EBITDA Stable and growing cash flows with no volume risk Volumes 100% contracted under long-term ship-or-pay gas transportation agreements Inflation-indexed and no periodic regulatory resets Going-in FFO and AFFO yields > 13% Unique opportunity to invest and participate in Brazil s growing gas industry 10
Significant access to gas supply and growing demand Gas supply from Bolivia and Brazil s offshore oil & gas fields Serving captive key industrial and populated states (~55% of Brazil s gas demand) Offshore/ LNG MG Belo Horizonte Bolivia SP RJ Rio de Janeiro São Paulo 11
We ve recently re-entered the Brazilian electricity transmission sector our strategy is two-fold Greenfield projects 70,000 km of greenfield lines to be awarded over the next 10 years Recently awarded 2,800 km of greenfield projects ($200 million equity investment) Long-life, 30-year concessions that earn cash flows under a stable, availabilitybased regulatory framework Brownfield opportunities In discussions with sellers of established portfolios Brazilian and international construction companies seeking capital 12
BIP: Attractive entry point 13
Main reasons to invest in BIP now Compelling relative value Discount to intrinsic value Entering period of significant growth 14
Great value relative to peers S&P 500 Utilities Index BIP Distribution Yield Distribution Yield 4.1% 3.4% 4.8% 4.6% 2011 2016 2011 2016 Distribution Growth $6.91 4% CAGR $8.78 Distribution Growth $0.71 12% CAGR $1.55 2009 2016E 2009 2016E 15
BIP is trading below our historic multiples (in US$ millions, unless otherwise noted) 2012 2013 2014 2015 2016 AFFO $ 355 $ 553 $ 593 $ 672 $ 796 Return of Capital (9) (35) (36) (40) (45) $ 346 $ 518 $ 557 $ 632 $ 751 Units Issued 287.3 310.0 315.2 337.4 345.3 Per share $1.20 $1.67 $1.77 $1.87 $2.17 Price-to-AFFO Volume weighted average price 17.9x 14.9x 14.8x 15.0x 12.3x Period end 19.5x 15.7x 15.8x 13.5x 14.7x 16
~30% discount to intrinsic value $0.7B $1.0B $2.1B Street Consensus NAV Implied NAV Utilities (2014) Transport (2015) Energy and Comm Infra (2016) 17
Entering period of significant growth Organic projects on the go Brazilian toll roads Brazilian rail N.A. container terminal Utilities Commissioning 2017-2019 2017 2016-2017 2016-2019 Recent acquisitions Peruvian toll roads N.A. gas storage Australian ports Closed June July August ~$1 billion of pending investments (2017) Brazilian electricity transmission Brazilian natural gas transmission 18
The opportunity for capital appreciation is two-fold Current unit price 1 $34 Yield 1 4.6% BIP Re-rating Infrastructure Returns 8.0% 9.0% Less: Organic growth 5.0% Cash yield range 3.0% 4.0% 5-year Roll-forward Reflecting Growth Rates Target 3 Actual 3 Distribution increase 5.0% - 9.0% 12.0% Current Yield 1 4.6% Trading yields 3.0% 3.5% 4.0% Implied unit price 2,3 $52 $45 $39 Dividend Growth Rates 5.0% 7.0% 9.0% 12.0% 5-yr Projected Price 3,4 $43 $48 $52 $60 1) Based on closing price on NYSE on Sept 23, 2016 and 2016 annualized distribution 2) Based on projected annualized 2016 quarterly dividend 3) Assumptions constitute forward-looking statements and information. 4) Assuming no change in current dividend yield 19
Disclaimer FORWARD-LOOKING STATEMENTS This presentation contains forward-looking information within the meaning of Canadian provincial securities laws and other forward looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities regulations. The words growing, target, growth, expect, will, return, appreciation, potential, believe, continue, increase, derivations thereof and other expressions which are predictions of or indicate future events, trends or prospects and which do not relate to historical matters identify the above mentioned and other forward-looking statements. Forward-looking statements in this presentation include statements regarding participation in a growing asset class, targeting of dividend yield and growth in FFO and distributions, our ability to identify, acquire and integrate new acquisition opportunities, completion of and performance of new investments, return objectives, potential demand for additional capacity at our operations, further investment in each of our business segments, volume increases in certain of our businesses due to customer demands and economic recovery, growth in the sectors in which we operate, targeted equity returns, upside potential from development projects, future growth prospects including large-scale development and expansion projects, distribution payout ratio, ability to finance our backlog of growth projects, future capital appreciation, distribution policy and objectives and other statements with respect to our beliefs, outlooks, plans, expectations and intentions. Although Brookfield Infrastructure believes that these forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on them, or any other forward looking statements or information in this presentation. The future performance and prospects of Brookfield Infrastructure are subject to a number of known and unknown risks and uncertainties. Factors that could cause actual results of Brookfield Infrastructure to differ materially from those contemplated or implied by the statements in this presentation include general economic and market conditions in the jurisdictions in which we operate, regulatory developments and changes in inflation rates in the U.S. and elsewhere, the fact that success of Brookfield Infrastructure is dependent on market demand for an infrastructure company, which is unknown, the availability of equity and debt financing, foreign currency risk, the outcome and timing of various regulatory, legal and contractual issues, the competitive business environment in the industries in which we operate, the competitive market for acquisitions and other growth opportunities, our ability to satisfy conditions precedent required to complete acquisitions (including without limitation those mentioned in this presentation), our ability to integrate acquisitions into existing operations and the future performance of those acquisitions, our ability to complete large capital expansion projects on time and within budget, favourable commodity prices, weakening of demand for products and services in the markets for the commodities that underpin demand for our infrastructure, ability to negotiate favourable take-or-pay contractual terms, the continued operation of large capital projects by mining and industrial customers of our businesses which themselves rely on access to capital and continued favourable commodity prices and other risks and factors described in the documents filed by Brookfield Infrastructure Partners L.P. with the securities regulators in Canada and the United States including under Risk Factors in its most recent Annual Report on Form 20-F. Except as required by law, Brookfield Infrastructure Partners undertakes no obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise. IMPORTANT NOTE REGARDING NON-IFRS FINANCIAL MEASURES To measure performance we focus on net income as well as funds from operations ( FFO ) and invested capital, which we refer to throughout this presentation. We define FFO as net income plus depreciation, depletion and amortization, deferred taxes and certain other items. We define invested capital as partnership capital, adding back non-cash income statement items net of maintenance capital expenditures, accumulated other comprehensive income and certain other items. FFO and invested capital are not calculated in accordance with, and do not have any standardized meaning prescribed by International Financial Reporting Standards ( IFRS ). FFO and invested capital are therefore unlikely to be comparable to similar measures presented by other issuers. FFO and invested capital have limitations as analytical tools. See the Reconciliation of Non-IFRS Financial Measures section of the most recent Annual Report on Form 20-F and the Partnership s Supplemental Information report for a more fulsome discussion including a reconciliation to the most directly comparable IFRS measures. 20