3i Infrastructure : Shareholder roadshow presentation (1.4mb)

Results for the half year to 30 September 2020

11 November 2020

Important information

The sole purpose of this information-only presentation ("Presentation") is to provide information on a non-reliance basis about 3i Infrastructure plc and its subsidiaries (together "3iN") and their holdings in 3iN's investment portfolio. This Presentation should not be taken as an offer of any kind or a recommendation to buy, sell or hold the shares of 3i Infrastructure plc or any other securities. Nothing in this Presentation constitutes or is intended to constitute an offer, invitation or a commitment of any kind or a solicitation by 3iN or its investment manager 3i Investments plc ("3i") to provide services or to enter into any transaction, nor does it evidence an intention on the part of 3iN, 3i or their respective affiliates (together the "Companies") to make such an offer. The Presentation does not and is not intended to give rise to legally binding relations and shall not create any legally binding obligations (whether contractual, non-contractual or otherwise) on the part of the Companies or any other person.

Nothing in this Presentation constitutes or is intended to constitute financial or other advice and you should not act upon any information contained in the Presentation without first consulting a financial or other professional adviser.

No representation, warranty or undertaking is given by the Companies or by any other person in respect of the fairness, adequacy, accuracy or completeness of statements, information or opinions expressed in the Presentation and neither 3iN, 3i nor any other person takes responsibility for the consequences of reliance upon any such statement, information or opinion in, or any omissions from, the Presentation. The information contained in this Presentation has not been audited or verified. The Presentation may contain statements about the future, including certain statements about the future outlook for 3iN. Any projections or forecasts in this Presentation have been prepared by 3iN and 3i based on various assumptions concerning anticipated results (which assumptions may or may not prove to be correct) and are illustrative only. These are not guarantees of future performance and will not be updated. The actual results may be materially and adversely affected by economic or other circumstances and the analysis is based on certain assumptions with respect to significant factors that may prove not to be as assumed. Nothing contained herein shall constitute any representation or warranty as to future performance of 3iN securities, any financial instrument, credit, currency, rate or other market or economic measure and past performance is not necessarily indicative of future results.

To the fullest extent possible under English law, by accepting delivery of the Presentation, each recipient releases each of the Companies and each of their affiliates, advisers, directors, employees and agents in all circumstances from any liability whatsoever (other than for fraud) howsoever arising from its use of the Presentation. In addition, no responsibility or liability or duty of care is or will be accepted by the Companies or their affiliates, advisers, directors, employees or agents for updating this Presentation (or any additional information), correcting any inaccuracies in it or providing any additional information to recipients.

The distribution of this Presentation in certain jurisdictions may be restricted by law. Persons into whose possession this Presentation comes are required to inform themselves about and to observe any such restrictions.

This Presentation is not an offer of securities of 3iN or any 3i entity for sale in the United States and securities may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or an exemption from registration under the Securities Act. Any public offering of any such securities in the United States would be made by means of a prospectus that could be obtained from 3iN and 3i and which would contain detailed information about

3i Infrastructure plc, its management and its financial statements. 3iN is not currently making any public offering in the United States and no such prospectus has been issued. No public offering of any such securities in the United States is currently contemplated.

Presentations made to US investors are made only to 'qualified purchasers' (as that term is used for purposes of Section 3(c)(7) of the Investment Company Act of 1940, as amended (the '1940 Act')), and 'accredited investors' and 'qualified institutional buyers' (as defined under the Securities Act of 1933).

As a result, by your continued attendance at today's presentation you represent that you act as investment manager for one or more accounts that are 'qualified purchasers', 'accredited investors' and 'qualified institutional buyers'. Moreover, you, on your own behalf and on behalf of your affiliates, agree that so long as 3iN is not registered under the 1940 Act, any securities of 3iN that are purchased will be purchased only for the accounts of 'qualified purchasers', 'accredited investors' and 'qualified institutional buyers'. You and your affiliates also agree that any securities of 3iN owned by any such accounts will be sold and/or transferred only in offshore secondary market transactions (e.g. through the London Stock Exchange) without the direct or indirect involvement of 3iN, its affiliates, agents or intermediaries.

This document has not been approved by a person authorised under the Financial Services & Markets Act 2000 ("FSMA") for the purposes of section 21 FSMA. This document has not been approved by the UK Financial Conduct Authority, the Jersey Financial Services Commission or other relevant regulatory body, nor by a person authorised under the Financial Services & Markets Act 2000. 3i Investments plc is acting only for 3i Infrastructure plc and is not acting for any other person (a "third party"). 3i Investments plc will not be responsible to any third party for providing the protections afforded to clients of 3i Investments plc and will not be advising any third party on investing in 3i Infrastructure plc.

This disclaimer notice (and any non-contractual obligations arising out of or in connection with it) is governed by English law.

2

Consistently strong performance against our objectives

Our strategy		Our objectives
To maintain a balanced portfolio of		To provide shareholders with:
infrastructure investments delivering an		• A total return of 8% to 10% per
attractive mix of income yield and capital		annum, to be achieved over the
appreciation for shareholders		medium term; and

• A progressive annual dividend per share

3

Generating value in the current market

Return

Mid Market

Economic

Infrastructure

Large Core

Infrastructure

Operational

PPPs

Our investment focus

Asset intensive, resilient companies

Asset bases that are hard to replicate

Providing essential services

Established market positions

Good visibility of future cash flows

Acceptable element of demand or market risk

Risk	Opportunities for further growth

4

Resilient to the challenges of Covid-19

3.8%

Total return on opening NAV

Resilient portfolio underpinning growth in net asset value

259.4p

NAV per share

Good level of income and non-income cash to support the dividend

Strong liquidity position to make new investments

On track to deliver the FY21 dividend target, 6.5% higher than FY20

£48m

Total income and non-income cash

£360m

Cash position

4.9p

Dividend per share for the half year

9.8p

Target dividend for FY21, up 6.5%

5

Strong return from a diversified portfolio

for the half year to 30 September 2020

Total portfolio return						5.5%
Infinis		2.5%
Tampnet		6.3%
Joulz		16.0%
Ionisos		8.2%
TCR	(5.6)%
ESVAGT
			1.9%
Oystercatcher		4.5%
Valorem		20.5%
Attero	(2.9)%
Projects		10.6%
India Fund		18.5%

6

A well-diversified, balanced portfolio

		ProjectsIndia Fund		Infinis
	Attero	2%
	4%
Valorem	6%		16%
	6%
					Tampnet
Oystercatcher	9%		20 assets	13%
			£1.8bn
	9%
ESVAGT					12%

Joulz

11%

Utilities	Portfolio value by sector
Transportation /	4%
logistics	9%
Communications
12%
	40%
Healthcare	13%
Natural Resources	22%
/ energy
Social
infrastructure
Netherlands	Portfolio value by country
2%
France
9%
UK	21%
9%
Norway

TCR

12%

Belgium	11%
19%

Ionisos

Luxembourg	13%
Denmark
16%

India

7

Engaged asset management approach to positively influence our companies

1	Strengthen portfolio company management teams

2	Invest and develop companies to support a sustainable future

3	Growing our platform businesses through acquisitions

8

Infinis

Generator of electricity

							£322m
					£281m		£132m
			Cost		Closing value		Cash income and proceeds
Ownership	100%
Date invested		December 2016 and April 2018
Management team HQ Northampton, UK
Country		UK
Currency		GBP
Sector		Utilities

• Performed ahead of expectations in the period
• Mostly unaffected by the pandemic and continues to benefit from the inflation-linked UK Renewables Obligation Certificate regime until 2027
• Thanks to its near-term hedging strategy, low power prices have had limited impact, but revised medium to long-term forecasts weighed on valuation
• Small bolt-on acquisition for a solar development at Ling Hall and good progress on the broader solar initiative which could represent 400 megawatts of generating capacity, over the next few years

•

9

Tampnet

Offshore telecom network

					£187m
						£225m
			Cost		Closing value
Ownership	50%
Date invested		March 2019
Management team HQ		Stavanger, Norway
Countries		Norway, UK, US
Currency		NOK
Sector		Communications

• Agreed to acquire BP's fibre assets in the Gulf of Mexico, securing ownership of a key piece of subsea infrastructure and enabling Tampnet to replicate its successful North Sea business model
• The acquisition is expected to complete in 2021 and is value accretive
• Witnessed slower near-term growth and lower roaming revenues owing to lower oil prices and the pandemic
• Replaced CFO, appointing Ulf Bonnevier

10

Joulz

Essential energy infrastructure equipment and services

£190m

£14m

£219m

Cost

Closing value

Cash income and proceeds

Ownership

100%

Date invested

April 2019

Management team HQ

Rotterdam, Netherlands

Countries

Netherlands

Currency

EUR

Sector

Utilities

• Performed ahead of our investment case again for the year to date with limited impact from Covid-19
• Carve-outfrom Stedin and the integration of the new electric vehicle charging solutions business acquired in March are progressing well
• Completed a successful refinancing on better terms than envisaged in our previous valuation
• Continued to strengthen the management team with the appointment of Joulz's first CFO, Paul Smits, previously the CFO for the Port of Rotterdam

11

Ionisos

Cold sterilisation for the healthcare industry

						£186m
						£212m
				Cost		Closing value
	Ownership	95%
	Date invested		September 2019
	Management team HQ		Civrieux, France
	Countries		France, Spain, Germany, Italy, Estonia
	Currency		EUR
	Sector		Healthcare

• Performed well during our first year of ownership
• Benefited from cold sterilisation being an essential service
• Pandemic resulted in reduced demand for surgical, cosmetic and veterinary products but offset by an increase in demand for medical PPE and packaging
• Started construction of a new E-beam facility in Bautzen, Germany
• Added a new CFO to the management team, Mohamed El Bounaamani

12

TCR

Ground support equipment in airports

£151m

£187m

£22m

Cost

Closing value

Cash income and proceeds

Ownership

46%

Date invested

July 2016

Management team HQ

Brussels, Belgium

Countries

10 European countries, Malaysia,

Australia, New Zealand and US

Currency

EUR

Sector

Transportation / Logistics

• Performed broadly in line with our expectations during the first half of the year, as flights resumed slightly earlier than anticipated and operating costs were managed well
• Assuming a more prolonged and gradual recovery to previous air traffic levels by 2024 and consequential impacts on TCR's customers which reduced the valuation
• Increasing interest in TCR's business model from existing and potential new customers could accelerate growth in the medium term

13

ESVAGT

Wind farm maintenance support vessels and emergency response vessels

					£147m
					£166m
			Cost		Closing value
Ownership	50%
Date invested		September 2015
Management team HQ		Esbjerg, Denmark
Countries		Denmark, Norway and UK
Currency		DKK
Sector		Natural Resources / Energy

• Overall performance improved compared to the same period last year
• ERRV fleet seeing lower utilisation, as a result of lower oil prices
• Wind farm SOVs largely unaffected by Covid-19 or reduced oil prices
• Committed further £27m to support continued growth in the wind sector, with three new SOV vessels due to commence operations in the coming year

14

Oystercatcher

Oil product storage terminals

£139m

£161m

£125m

Cost

Closing value

Cash income and proceeds

Ownership

45%

Date invested

August 2007 and June 2015

Management team HQ Various

Countries

Netherlands, Belgium, Malta, Singapore

Currency

EUR

Sector

Transportation / Logistics

• Good first half of the year, outperforming expectations and prior year
• Drop in oil prices caused a contango market structure which led to storage rate improvements and customers keen to renew earlier
• Negative impact of Covid-19 has been limited to lower throughput levels as a result of lower end- user demand and refineries continuing to operate below their normal output levels

15

Attero

Waste treatment and processing

£88m

£9m

£101m

Cost

Closing value

Cash income and proceeds

Ownership

25%

Date invested

June 2018

Management team HQ

Apeldoorn, Netherlands

Country

Netherlands

Currency

EUR

Sector

Utilities

• Continued to perform well operationally
• Waste production in the Netherlands has largely recovered, however waste imports from the UK are still below pre-pandemic levels
• Plants were able to continue operating at full capacity during the period by drawing waste from
  Attero's buffer
• Significant reduction in power prices was partly mitigated by the company's hedging programme but the valuation reflects lower medium to long- term forecasts

16

Valorem

French renewable energy developer

						£59m
								£105m		£8m
			Cost		Closing value		Cash income and proceeds
Ownership			28.5%
Date invested			September 2016
Management team HQ	Bègles, France
Country			France
Currency			EUR
Sector			Utilities

• Performed well in the first half of the year, benefiting from favourable wind conditions, good availability and a partial refinancing
• All assets continued to operate as normal during the lockdown period and a number of new projects became operational, while some construction projects suffered only limited delays
• Management team has been strengthened with the appointment of a new CFO, Tristan Maes

17

Projects portfolio

• Performed in line with expectations
• Availability-basedrevenues unaffected by the Covid-19 pandemic
• In October, agreed acquisitions of several co- shareholders' stakes for a total equity investment of c.€25m

£52m

£73m £14m

Cost		Closing value		Cash income and proceeds

18

India Infrastructure Fund

• Significant progress made towards realising the remaining assets in the fund
• Agreement reached to sell stake in Krishnapatnam Port, for a price significantly above the latest valuation

£108m

£32m £25m

Cost		Closing value		Cash income and proceeds

19

Outlook

3iN remains well positioned to deliver its objectives

Resilient portfolio with strong market positions

Strong liquidity to make new investments and invest in our portfolio

Continuing to deliver progressive dividend

20

Appendix

Share price continues to outperform

5 year share price and NAV performance	Total Shareholder Return
		3iN		FTSE 250		3iN NAV

Note: 1. FTSE 250 rebased to 3iN opening share price at 1 October 2015.	22
2.Total shareholder return shown per annum.

FY21 target dividend growth of 6.5%

Dividend growth since IPO

(pence per share)

Special dividends

Ordinary dividends

FY21 dividend target

41.4

													4.2% p.a.1			17.0				10.2%	6.4%	6.5%
5.00	5.30	5.50	5.72	5.94	6.49	6.70	7.00	7.25	7.55	7.85	8.65	9.20				9.80
	FY08		FY09		FY10		FY11		FY12		FY13			FY14		FY15		FY16		FY17		FY18		FY19			FY20				FY21

1 Annualised growth rate in ordinary dividends to FY18.

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Portfolio summary

30 September 2020 (£m)

	Directors'						Foreign	Directors'	Allocated	Underlying	Portfolio total
	Investment in		Divestment in	Accrued income	Value	valuation 30	foreign
Portfolio assets	valuation 31		exchange	portfolio income	return in the
the year		the year	movement	movement	September	exchange
	March 2020		translation	in the period	period1
						2020	hedging
Infinis	285	-		(2)2	-	(2)	-	281	-	9	7
Tampnet	205	23	-	-	14	4	225	(7)	2	13
Joulz	187	-		-	3	24	5	219	(2)	3	30
Ionisos	194	-		-	4	9	5	212	(2)	4	16
TCR	195	-	3,4	-	6	(19)	5	187	(3)	6	(11)
ESVAGT	141	25	-	-	(4)	4	166	(7)	10	3
Oystercatcher	154	-		-	-	6	1	161	-	-	7
Valorem	88	-		-	-	15	2	105	(1)	2	18
Attero	103	13	-	-	(5)	2	101	(1)	1	(3)
Economic infrastructure portfolio	1,552	28		(2)	13	38	28	1,657	(23)	37	80
Projects	68	-		-	-	4	1	73	(1)	3	7
India fund	27	-		-	-	5	-	32	-	-	5
Total portfolio	1,647	28		(2)	13	47	29	1,762	(24)	40	92
Adjustments related to
unconsolidated subsidiaries5	5	-		-	3	(3)	-	5	-	3	-
Reported in the Consolidated
financial statements	1,652	28		(2)	16	73	-	1,767	(24)	43	92

1. This comprises the aggregate of value movement, foreign exchange translation, allocated foreign exchange hedging and underlying portfolio income in the period.
2. Shareholder loan repaid.
3. Capitalised income.
4. Follow on investment in ESVAGT of £15 million.
5. Income statement adjustments explained in the September 2020 Half Year Report.

24

Income in line with expectations

(£m)

0

5

10

15

20

25

30

35

40

Economic infrastructure - interest

European projects

UK projects

Economic infrastructure - dividends

Non-income cash

Non-portfolio interest

Sep-20Sep-19

25

Discount rate movement

The weighted average discount rate is 11.2%

Portfolio weighted average discount rate

9.9%	10.0%

	11.3%	11.2%
10.5%	10.8%

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Sep-20

26

Hedging programme mitigates volatility

(£m)

FX gain before	FX gain after
hedging	hedging

Hedged assets (€/SGD/DKK/NOK)

29

5

Note: SGD exposure is within Oystercatcher, a euro denominated investment.

27

Sensitivities to total return

	Inflation linkage
	Assets with revenues:		12%
			Directly linked to inflation			Sensitivity	+1% point	-1% point
					Change in inflation over	£21m	£(21)m
						underlying assumption for
			Partly linked to inflation			next 2 years
				88%
	Foreign exchange		1%1%
		7%
			GBP
					Sensitivity	+5%	-5%
			EUR/SGD
				47%
			NOK		Change in foreign	£6m	£(6)m
			DKK	44%		exchange rate1
			INR
1.The sensitivity calculation assumes that the hedging programme movements are fully effective. Foreign exchange sensitivity calculation includes cash held at 30 September 2020.	28

Introduction and Background

Experienced and well resourced team established in 2006

Jim Stoner		Thomas Fodor		James Dawes
Senior Counsel		IR (D)		CFO
Hazel		Richard		Jonathan
		Doberman
McElwain		Widdowson
		Financial
Legal Counsel		Manager
		Controller
		Laura O'Brien		Sam Pickering
Ed Pike			Senior
	(Deal
Legal Counsel			Finance
	Assistant)
			Manager

Ben Adler

Finance

Manager

Chris Rowland

Strategy

(D)

Dhineka

Narain

(A)

Declan

Snowden

Finance

Manager

Shany Salem

(A)

Phil White

Managing Partner

Bernardo

Stephane

Scott Moseley

Aaron Church

Anna Dellis

Grand-

John Cavill

Nigel Middleton

Sottomayor

Partner

Partner

Partner

guillaume

Partner

Partner

Partner

Partner

Matt Barker

Tim Short

Stephane Duhr

Matthew

Antoine Matton

Celine

Oscar

Edwards

Maronne

Tylegard

Partner

Partner

(D)

(D)

(D)

(D)

(D)

Bryan Acutt

Fernando

Laura Kaps

Paolo

Yaad Virdee

Sebastian

Castagnolo

Bergamelli

Schwengber

(AD)

(AD)

(AD)

(AD)

(AD)

(AD)

Neel Mistry

Adrien

Alexi

Rick

Thomas

Delmotte

Kirilenko

Lethbridge

Monteiro

(SA)

(SA)

(SA)

(SA)

(SA)

Bo Nie

Chouaib

Elia

Mads Moller

Giovanni

Benlahoussine

Quartulli

Morgensen

Sparagana

(A)

(A)

(A)

(A)

(A)

D	Director
				Finance,
AD	Associate Director			European investment
			Ops, IR &		Legal
SA Senior Associate			team
			Strategy
A	Associate

50-strong Infrastructure team in Europe, with c.30 Investment Professionals and dedicated legal, finance,

IR and strategy executives

29

Governance and fees

Board of Directors

Investment Manager

Fees

• Independent Chair, five independent non-executive directors and one 3i Group appointed non-executive director
• Committed to observe requirements of the AIC Code of Corporate Governance
• Responsibilities include:
• • overall supervision of 3i Investments plc as the Investment Manager
  • monitoring of investments and divestments
• Services provided by 3i Investments plc as the Company's Investment Manager include:
• • origination, execution and realisation of investments
  • providing valuations of the Company's portfolio on a half-yearly basis
  • managing funding requirements and treasury management
  • managing the portfolio
  • providing support services in respect of the administration of the Company
• Tiered management fee: 1.4% p.a. in respect of the portion of the gross investment value of the Company's portfolio up to £1.25 billion; 1.3% p.a. above £1.25 billion up to £2.25 billion; and 1.2% above £2.25 billion
• One-offtransaction fee: 1.2% of the acquisition price of each new investment
• No fee on cash or other net assets
• Performance fee equal to 20% of the Company's total return in excess of 8%, payable in three equal annual

instalments, with the 2nd and 3rd instalments only payable if the performance of the Company exceeds 8%
in those years or is above the 8% hurdle over the three years on an annual basis	30