Brookfield Infrastructure Partners L P : - Transcript

TRANSCRIPT: Brookfield Investor Day

September 24, 2020

CORPORATE PARTICIPANTS

Brookfield Infrastructure Partners LP

• Sam Pollock - Chief Executive Officer
• Bahir Manios - Chief Financial Officer
• Jenine Krause - Chief Executive Officer, Enercare

BROOKFIELD INFRASTRUCTURE PARTNERS L.P.

Sam Pollock, Chief Executive Officer, Brookfield Infrastructure Partners

Good afternoon, and welcome to Brookfield Infrastructure's 2020 Investor Day Presentation. My name is Sam Pollock, and I'm the Chief Executive Officer of Brookfield Infrastructure.

I'll begin today's presentation, as I have in other years, by doing a quick recap of the year so far. After that, I'm going to ask Bahir Manios, our Chief Financial Officer, to come up and explain why our businesses have been so resilient this year. After Bahir, I'm pleased to have Jenine Krause, the CEO of Enercare, come up and talk about how her team works with our asset management group to create value at Enercare. We think it's a great case study on how all our businesses work for our asset management group to create value. And then finally, I'll come back up and talk a bit about our capital allocation strategy for the next couple of years.

We came into the year with tremendous momentum. But unfortunately, we were forced to deal with a number of circumstances that arose as a result of the government shutdowns that were meant to deal with the pandemic. Nonetheless, it's been a successful year so far, and it's allowed us to demonstrate the resiliency of our business, as well as the financial strength of the company. We also didn't slow down our execution of our investment strategy. And in fact, we have a number of completed transactions already done so far this year. We also attracted new shareholders of Brookfield Infrastructure with the spinout of BIPC.

So let me explain how the global shutdown highlighted the strength of our business. First of all, all our businesses were deemed essential and as a result, they've largely provided uninterrupted services to our customers throughout the government shutdowns. In addition, our businesses are supported by strong, regulated and contractual frameworks and as a result, we didn't have any counterparty issues because of the strength of our counterparties. Due to these strong investment attributes, modest volume and commodity price exposures, our results for the first half of the year were impacted by less than 5%. In addition to that, we are projecting that for the full year, we should finish ahead of last year by a small margin.

Now let's look at our financial position. In spite of the volatility in the capital markets, we've been operating with some of the highest levels of liquidity that we've ever had. Today, we have approximately $3.5 billion of total liquidity. In addition to that, we have no significant debt maturities in the next five years and our credit ratings have remained strong at BBB+.

Brookfield 2020 Investor Day Transcript | 1

I think it's also important to mention that we continue to finance our business largely on a non-recourse basis and today, 85% of our debt is non-recourse to the parent company. Also, due to the quality of our businesses, we have interest coverage at the corporate level that's greater than 20x.

Often during times like these, business strategies can change. Our full-cycle investment strategy, however, has not. We continue to look for great assets to acquire for value. Once we own them, our strategy is to take an active approach to driving growth and returns in those businesses. Once we have de-risked the businesses and optimized the cash flows, then we look to sell the business to a lower cost of capital buyer. And then we start all over again. We like to say we buy, enhance, sell and then repeat.

We started the year with a number of asset sales underway and a plan to recycle a significant amount of capital. I'm pleased to say that none of those efforts were derailed by the economic conditions and that we have generated $500 million to-date and generated attractive returns on the sales that we made. Given the strong appetite for de-risked,high-quality infrastructure assets, we have several initiatives underway, and we expect to generate over $700 million of proceeds in the next three to six months.

And the proceeds that we are generating, we are redeploying those back into high-earning opportunities. So far in 2020, we've committed over $1 billion to three exciting transactions. The first investment we made was into a U.K. telecom business. This is a business whose cash flows are anchored by 2,000 well- located towers in the United Kingdom. The real excitement for the business, however, is the fact that we're looking to deploy small cell technology as well as wireless in-building solutions to a number of properties, as well as other similar assets that are looking to improve receptivity.

We recently closed our highly anticipated Indian telecom tower transaction, where we're acquiring 135,000 towers from Reliance Jio. This transaction is exciting, not only because of the scale of the deal, but because of the significant growth in that market, as well as the high-quality counterparty that underpins the cash flows.

And then more recently, we signed a deal to acquire a sizable stake in the largest LNG facility in the United States, Sabine Pass. Again, this is a transaction that's not only exciting because of the scale, but also because of the contracts that are underlying the business.

The last thing I want to mention as far as what's gone on so far this year is the fact that we're pleased with the spin-out of BIPC. You may recall that at last year's Investor Day, I came up and spoke about how we wanted to introduce Brookfield Infrastructure to investors who couldn't hold partnership units. Well, at the end of this year, we completed that reorganization and completed the spin-off of BIPC via a unit split. One of the rationales for spinning out BIPC was the fact that Brookfield Infrastructure Partners wasn't eligible for a number of indices. Well, we're pleased to note that BIPC has been included in some of those indices, and one of them was the Russell 2000 Index.

We also look to spin out BIPC in order to generate interest and broaden our investor base. And we think we've achieved that given the significant trading in the stock, which now represents about one-third of the total traded volume of the Brookfield Infrastructure units, and the performance of these shares have been exceptional as well. So all in all, we think it's worked out very, very well.

So with that, I'm going to ask Bahir to come up and talk about why our businesses have been so resilient.

Bahir Manios, Chief Financial officer, Brookfield Infrastructure Partners

So thanks, Sam, and good afternoon, everyone. Last year at this event, we introduced, or coined, a new term: grow-tility. We started using this term to describe Brookfield Infrastructure's unique combination of utility-like characteristics, in addition to its high-growth profile. In past sessions and in a lot of our

Brookfield 2020 Investor Day Transcript | 2

materials, we spent a lot of time going through our growth profile. That profile still remains intact today, and Sam will come up later on to talk a lot more about this.

So, I wanted to spend my time this year focusing more on our utility-like characteristics, just given everything that's going on in the macro backdrop that we're operating within currently. During my presentation last year, you might recall, I spoke at length about how BIP would perform during a recession. All in theoretical terms, of course. Since then, boy, a lot has happened. And while no one could have predicted the events that actually transpired this year, it did certainly put our thesis to the test.

In what will hopefully be an anomaly of a year, our business performed well, and our financial results were virtually unimpacted. And that really comes down to the fact that we have the following attributes that we lay out here in the slides, and these attributes, especially when combined, effectively put a floor on our results.

To truly appreciate the resiliency of our performance this year, I'll spend a few minutes to just take you through the nature of the underlying cash flows for each one of our segments. Our business today generates about 70% of its FFO from our utilities, data and energy segments. These three businesses, although different, all performed well, given that they all share many of the same utility-like attributes. To highlight this, here's a comparison of our results for the first half of 2020, compared to the first half of 2019. As you can see, our results in these businesses were 8% higher compared to the prior year period. Solid organic growth in these three businesses demonstrated the strong underlying fundamentals in these three segments. This growth, coupled with the benefits of our asset rotation strategy, more than offset the impact of weaker emerging market currencies, in addition to the very small impact we incurred that's related to the global shutdown.

To get into a bit more detail on how our businesses were able to cope with this challenging macro backdrop, I'll highlight a few characteristics that are consistent across our different segments. Starting with our utilities business, and this segment today contributes about 35% of our total FFO, over 95% of the segment's cash flows are either contracted or regulated. The cash flows we generate in this segment are also very highly diversified. We operate businesses in five different countries with five different regulatory frameworks and with five different well-established regulators. Our operating margins and cash conversion ratios for this segment also improved in 2020.

Margins across our utility business currently stand at 75% on average. And due to the relatively low maintenance capital requirements we have in this segment, our cash-on-cash conversion ratios are now over 95%. And that all led to solid results for this segment, as you would expect. Our results grew in local currency terms, compared to the prior year, driven by inflation indexation in addition to a growing rate base where we typically earn very strong risk-adjusted returns.

Moving on to our energy business. Today, this segment spans three distinct asset classes, operates in three countries. And within these asset classes, we're running businesses that generate very stable cash flows underpinned by long-term contracts.

To expand on this a bit further, I thought I'd highlight a few facts for you. First, 85% of our cash flows in this segment are secured by thousands of contracts. Second, within the midstream operating group, our contracts have an average duration of 11 years and over 80% of those contracts are with investment- grade-rated counterparties. And lastly, there are only three individual counterparties that comprise even 1% of our total revenues. This overall diversification by asset class, region and counterparty, in addition to contribution from growth capital investments we've been doing in the last 12 years that recently came online, led to very strong results for this segment, with FFO being 13% higher this year, compared to the prior year.

Brookfield 2020 Investor Day Transcript | 3

Then we come to our data business. Since 2015, we've built a very large business that today, contributes about 15% of our total FFO. Data has been the fastest-growing commodity of the last decade, and we're now one of the few managers around the world that have investments that span the entire connectivity value chain. Our data business is composed of one of the largest tower portfolios in the world that has a contracted base of almost 180,000 sites in six countries, a global data center business that has approximately 50 sites in 14 countries and an extensive fixed and wireless network that serves over 2.5 million residential and enterprise customers.

Across these businesses, 95% of our total revenues are underpinned by contracts that are not dependent on volumes or usage. The average duration of these contracts we have in this segment is approximately 15 years, and that's spread across predominantly investment-grade counterparties.

So this brings me to our transport segment, which currently accounts for just under 30% of our total FFO. This is where we saw the majority of the impact of the global shutdown, given the nature of the businesses here that have volume exposure that is associated with them. That being said, we're quite pleased with how our transport business performed, all things considered. The reason our results were mostly unimpacted, and this in a segment that many would have expected would be significantly hit, was due to the fact that, first, over 40% of our total FFO in this segment is underpinned by long-termtake-or-pay contracts. In addition to that, we own networks that are critical to the overall basic functioning of the day- to-day economy.

I'll take you through some of the specifics on the various segments, or operating groups, within the segment in a minute. But as you can see from the bar chart here, the overall impact to our transport cash flows have been very minimal in the grand scheme of things. In fact, in total, only 3% of our FFO is impacted, and we expect to be made whole for a large portion of this in the near future, as I'll explain later on.

I'll start off by taking you through our rail business, which makes up about 50% of our FFO in this segment. We now have significant scale in this operating group. We operate businesses in Australia, North America, Brazil and the U.K. A critical element of why we're generally attracted to rail businesses is that a large portion of their revenues tend to be highly contracted. In fact, almost 50% of the businesses we own have cash flows that are underpinned by minimum volume guarantees. And that sets a really nice floor on our volumes and provides us with great downside protection.

Additionally, our rail business is very well-diversified, not only by region, but also by the types of goods, as you can see in the slide, that are traveling across our networks and through the many customers that we have exposure to, or we service. So, all of that to say, this has all led to results in 2020 for this operating group that were higher than the previous year. And that's due to the resiliency of the many commodity groups I noted, which we have exposure to. In addition, I'll particularly note the agricultural segment, which extremely outperformed this year.

On to our toll roads and as a background here, we now own networks in four countries, being Brazil, Chile, India, and Peru. Our Brazilian toll road business is by far the largest contributor here, making up almost 75% of our overall toll road cash flows. Traffic levels in Brazil were not as impacted, as they were less sensitive to the macro backdrop. That's due to two key reasons. Firstly, the business predominantly serves heavy vehicle traffic across the country's largest domestic industries, and these include basic necessities such as food products. Furthermore, there's a significant reliance in the country on moving goods by road versus by rail, just because the country's rail infrastructure is less developed than in many other markets such as North America or Europe.

As it relates to our commuter roads that represent almost 35% of our toll road volumes, we saw a much steeper drop in volumes on those roads, as folks had the shelter-in-place for a long period of time. The good news, though, is on those roads, traffic is now back up to 85% of pre-shutdown levels. And in addition

Brookfield 2020 Investor Day Transcript | 4

to that, regulators in those countries have already publicly acknowledged that these government- mandated shutdowns qualified as a force majeure event under our existing contracts and as such, we expect to be compensated for the majority of the lost revenues that we incurred.

Lastly, we've included some information on this slide to showcase how diversified our ports business is, again, not only by geography but also by revenue stream. On an overall basis, our ports business FFO declined by approximately 15%. The impact on our overall results though for BIP were fairly negligible as our ports business currently represents less than 5% of BIP's overall FFO.

So finally, I thought I'd leave you with a few comments on our outlook for the balance of 2020 and heading into 2021. Hopefully, the main takeaway from my presentation today for you has been that our business has strong downside protection, but our upside potential is by no means capped. First, I would note, and Sam touched on this earlier in his remarks, I would note that our actual FFO per unit for 2020 is expected to be higher than 2019. All things considered, we're very happy to be in this position, given everything that's gone on.

That being said, though, there were three items that reduced our results by 15%. These are all impacts that we think will be reversed into 2021 and should act more as a tailwind to our results if all goes well. First, there are about $20 million or so of shutdown-related cash flows that we expect to get back into our results next year. Second, we do expect a bounce back in the Brazilian real from its current lows. And lastly, we experienced an eight-month delay in closing our Indian telecom transaction that Sam touched on earlier. Now that we've closed on this investment, receiving a full annual contribution from this business will be very accretive to our bottom line because this investment will provide us with very strong cash-on-cash yields right from the get-go.

In addition, the engine is running very well. Our outlook on organic growth heading into next year is fairly positive thus far. And momentum on the M&A front is quite strong, as you'll hear more in a second from Sam. So, the net result of all of what I just laid out, leads us to believe that 2021 is shaping up to be a fairly strong year.

And so with that, I thank you for your time this afternoon, and I will turn it over to Jenine.

Jenine Krause, Chief Executive Officer, Enercare

Thank you, Bahir. Hello, everyone. I'm Jenine Krause, and I am the CEO of Enercare. I was the Chief Operating Officer and part of the executive team when Enercare was a publicly traded company, and I led the Canadian operation as we took the company private. Two years ago, when Brookfield acquired Enercare, I had the opportunity to lead the team, and they put me in the CEO role.

Enercare is a case study that Sam and Bahir wanted to showcase today to explain how an operating company works in tandem with Brookfield to grow the business and to grow the shareholder returns. Let me start by telling you a little bit about us. We are the number one home and commercial services business in North America, with operations in both Canada and the U.S. We provide essential services in your home, such as hot water, heating and cooling systems that every household needs. We are supported by a team of 5,000 employees spread across 100 centers. And that's important because we lease the equipment to homeowners and bundle the value of the equipment together with the value of the service, because as a homeowner, you don't need to own your air conditioner. You just always want to have cool air. So with our model, homeowners don't have to worry about the burden of ownership. If we think your equipment needs to be updated or replaced or it needs a part, that's all on us. We take care of all of that for you and homeowners just pay a simple monthly fee.

Brookfield 2020 Investor Day Transcript | 5

Essentially, we are a utility business, but in your home. We have a rate base with steady reoccurring revenues. We just operate the rate base in your home and in the homes of one million customers in Canada, and over 100,000 customers in the U.S. and growing. And it's growing because since Brookfield acquired us, we have been aggressively expanding our rate base, especially in the U.S. market, as well as expanding our products and expanding our geographic presence.

As I mentioned, before Brookfield, we were a public company. And as a public company, we did not have a balance sheet that was financed on an efficient basis. With Brookfield's support, we now have a new capital structure backed by our strong underlying cash flows and a very healthy business. And it was also built in a way that allows us to access capital as we grow. And I'll tell you more about this later in my presentation.

What is special about our business is that we have four key characteristics that make it very attractive: first, predictable, reoccurring cash flows from long-term rental contracts on a range of essential services; second, we have a solid market position, a very strong Enercare brand in Canada and scale in the U.S. as the second largest player in a fragmented market; third, we have a stable customer base with low attrition, and that results in high margins. And we benefit from low attrition because we offer essential products, combined with a very diligent focus on delivering great service; and lastly, with 1% market share in the U.S. and access to capital, we have a tremendous opportunity for further growth.

So let me tell you how I fit into the world of Brookfield. As CEO, I report to a portfolio company Board, who is supported by the Brookfield team that's comprised of the investment management team. This would be Sam Pollock and the investment officers from around the world and the Asset Management team led by Ben Vaughan. This team combined creates collective power and expertise to really guide the strategic direction of Enercare while the Enercare executive team focuses heavily on the day-to-day operations and delivery of the business.

Our Board is comprised of a number of the Brookfield team members that worked on the original deal plus members of the asset management team under Ben. We do have quarterly Board meetings, but I will tell you that the Board stays very, very close to this business. I would usually talk to the various Board members once a week or every two weeks at least. If I need advice or the team needs advice, we have access to the Board, we have access to the broader team of Brookfield. And that leadership was really important early in this year as we have to navigate the uncertainty of the pandemic. As a portfolio CEO, I really feel quite supported and part of the broader team of Brookfield, as I have access to the entire team of professionals.

My day job is to lead the operational execution of this business. And as I mentioned, we view this business as a critical utility in people's homes. The rate base largely consists of hot water tanks, air conditioning units, furnaces. Day in and day out, my job and our team's job is to grow and maintain the rate base, just like any utility. Win new customers, manage existing contracts and operate within the regulatory environment that governs the technical and safety standards of our industry.

We have a network of technicians that we have to get to the right place at the right time. They must be engaged and motivated so they can do their best work for our customers. Our customers trust our technicians and give them access to their homes. And once we're in the home and we're delivering service, we get strong ratings and strong customer referrals, which allows us to continue to grow the rate base.

I also work side-by-side with the Brookfield team to lead the strategic elements of this business. Together, we focus on building efficient organizational structures and building a strong management team that can deliver on the strategy and the growth ambitions we have. We spent time strategizing on how to maximize the margins and extend and increase our cash flows. And together, we have built a path for growth that is transformational, not just transformational for our business, but also for our industry because we have

Brookfield 2020 Investor Day Transcript | 6

a rental product in the market that is unique. And we have a solid plan to open new channels in the U.S. that will help us accelerate the growth of that rate base.

The value we've created together is tremendous, and I have lots of examples, but I'm going to touch on four specific examples that really bring this to life. The first example is the efficient capital structure, which I already touched on. We worked with Brookfield to transition to the new capital structure that is a low- cost financing vehicle that allows us to borrow as we grow. What actually happened is Brookfield assessed our capital structure and based on what they saw across their portfolio of companies, they recommended a new structure, and we worked together to get this done.

But it was not a simple financing transaction, so Brookfield seconded a number of capable finance executives that came to our offices, worked side-by-side with our team and helped us negotiate the complex reworking of our balance sheet and provided the guidance and support we really needed to get this done. In fact, this new capital structure is a bit of a game changer for our business. It gives us more options to compete and compete differently while still generating high returns.

The second example is refining our strategy for growth. Our U.S. business is in the midst of a significant transformation, moving the core business from a transactional model to an annuity model. Brookfield suggested we apply the learnings from the last mile connections business in the U.K. to help accelerate the transformation, but more importantly, find new channels for growth. As many of you know, the last mile connections business has been an outstanding performer in the Brookfield portfolio for years. We use their approach to build out a dealer channel where we sign up dealers to sell our rental products to their customer base. The dealers win because they gain a service annuity, and we win because we get an incremental rental product. Through this model, we are converting more customers to our rental products and leveraging a larger footprint without the cost of acquisitions.

The third example is the sharing of resources. There are two ways that Brookfield helps shore up our team. First, we have Brookfield executives working as part of the Enercare executive leadership team in two areas: business development and finance. And these were critical gaps in the business. Because of Brookfield, we were able to access really high-calibergrowth-oriented executives much faster than if we had gone to market. And secondly, provide advice on guidance on critical projects. And I'll use IT as an example. At the time Brookfield bought us, we were just starting a very large project to modernize our IT systems, and it was risky. Brookfield brought in executives that have done this many times, and they helped us think through how to de-risk the project and find another approach. Our new approach is modular. It gets us to the end results a lot faster with less risk. And the project is now underway and progressing well.

The fourth area where we have created value together is access to the Brookfield economy. Brookfield owns several businesses that are complementary to Enercare, and we've had some early success with Brookfield Residential and our rental products, and we are actively talking to Brookfield Properties and Multifamily about our submetering products.

They have also introduced us to TXU, which is a retail electricity provider in the U.S., and we are about to jointly launch a fall campaign that bundles our home services together with TXU electricity products. This is a mass marketing campaign, so if you're in the Texas area in November, you will see our joint campaign on television or hear it on the radio. Obviously, our objective is to convert the very large customer base of TXU to our rental products over time. But more importantly, our learnings and experience with TXU allow us to rethink an offering that we can take to other utility partners.

In the two years since Brookfield acquired Enercare, our report card has been incredible. We've added over 110,000 new customers on annuity products. Over 50% of customers are now choosing to rent their equipment. When Brookfield acquired us, it was trending at 10%. Dealer adoption is starting to gain

Brookfield 2020 Investor Day Transcript | 7

momentum, and we've added to our U.S. rental products with the launch of rental water heaters. Our reoccurring gross margin has grown by 23% and is now 10x what it was two years ago in the U.S.

So, what does this mean from a returns perspective? If we ran this business as a stand-alone entity, we would have executed a business plan that would have delivered great base returns of around 12%. And given the risk profile of this business, we feel those are very compelling returns. But through the collaboration with Brookfield, the new capital structure, accelerating our rental penetration, the U.S. dealer model and accretive tuck-ins we will be working on, we really do see a path to delivering returns to shareholders of at least 20%. And that is why we're excited about the future with Brookfield.

Thank you, Sam, for inviting me to join you today, and I'll turn it back over to you.

Sam Pollock, Chief Executive Officer, Brookfield Infrastructure Partners

Thank you, Jenine. We're now in the home stretch. I know you must all be tired.

So, the last part of our presentation today is going to be focused on our capital allocation strategy. The strategy is composed of two pillars, namely, capital deployment and capital raising. I'm going to begin with capital deployment.

In order to set the table for where we're going, I thought I'd start with where we've been deploying capital for the last several years. Our first type of capital is that we invest in growth opportunities within our business, which we typically refer to as organic growth. Organic growth is usually stable year-over-year, and this is as a result of approximately $2 billion to $2.5 billion capital backlog that we have in place and that we replenish year-over-year. This translates into us investing approximately $800 million to $1 billion per year on a gross basis. After we apply some leverage, that usually works out to investing about $400 million.

The biggest component of our capital deployment relates to new investments. We've assembled a large investment team that entails approximately 80 investment professionals situated on five continents. As we've continued to grow our team, so has our ability to deploy capital. And in 2019, we invested $1.7 billion.

Now. looking at where we've invested during that three-year period, almost 65% of our capital went to North America and Europe with the balance being invested in South America, Australia, and India. Similarly, if we look at where we invested from a sector perspective, approximately 55% went into energy and utilities and 20% to 25% into data and transportation, respectively.

Now let's look at 2020. From a total dollar perspective, you can see that the equity invested into our growth projects has remained fairly constant at around $400 million. Also, despite this disruption to private equity activity for a few months during the meat of the shutdowns, we've still been able to deploy about $1.3 billion so far this year. And we believe we're on track for another banner year, in fact. This year, from a sector and geographic perspective, Asia Pacific is a little higher than what you saw for that three-year period and that data infrastructure investments is also a little on the higher side, and that just is owing to the very unusual large-scale transaction we did in India with Reliance Jio.

Now, as we look forward for the next several years, we can't help but believe that the secular trends for the infrastructure sector have never been better and, in fact, we may be pointing towards the beginning of what we're describing an infrastructure investment super-cycle. There's a lot of debate about how the economic shutdowns around the world are going to change the way we work, travel and spend money. But what is not up for debate is the fact that there will have been an enormous amount of indebtedness incurred by governments and many corporations to get through this period. Consequently, virtually all

Brookfield 2020 Investor Day Transcript | 8

governments and most companies are going to have to find creative ways and new sources of capital in order to repay that debt and invest in their businesses.

In addition to that, there are significant trends underway in the data, midstream and transportation sector that we think will drive significant investment opportunities and are well-suited for well-capitalized investors like ourselves. I'll come back to that in a second.

First, I want to get into some specifics about expectations for the next several years. We believe that with the scale of our organization, we can consistently originate and invest over $2 billion per annum on capital projects and acquisitions that meet our investment hurdles. From a geographic perspective, our focus will remain on developed economies, where we expect to invest approximately 70% to 75% of our capital.

We will still look for good value opportunities in emerging markets where we see lots of growth potential. From a sector perspective, we see the biggest opportunities in the data and energy midstream sectors. We are also very intrigued about the opportunity to acquire high-quality transportation assets, particularly airports, due to the negative sentiment towards those businesses. From a portfolio composition perspective, probably the biggest change will be the fact that data infrastructure will represent a more significant portion of our capital deployment going forward. And we expect it to be about 35%.

As I've mentioned a few times in the past, data infrastructure, or data in particular, has been the fastest- growing commodity. And we expect the rapid growth to continue for the foreseeable future, due to the increased video content that people are consuming, the advent of 5G and as well as new uses for AI and Internet of Things. With the replacement of obsolescent copper and the investment into fiber optics and new satellite systems, we are clearly in a unique 100-year data investment upgrade. We believe that upgrades to the global telecom sector and networks will require over $1 trillion in the next five years alone. We are targeting investments that offer attractive investment attributes, but also those that don't have risks such as technology obsolescence or cybersecurity risk.

To better explain this dynamic, I thought we'd profile our recent Indian telecom tower transaction. Our counterparty is Reliance Jio, which is the largest mobile network operator in India and part of the Reliance industry group. Over the past several years, Reliance Jio has invested $50 billion to build out its tower and fiber networks. In addition to that, they also are spending tens of billions of dollars to build out their e- commerce business, which is the future of the company. As a result, they needed to recycle out of their infrastructure assets so that they can reinvest those proceeds back into their core operations. Many large telecom companies face these exact same circumstances.

Now, we already had a great relationship with Reliance. That goes back to the gas pipeline carve-out transaction that we did with them back in 2019. The rationale for working with us again was that we are a trusted, long-term investor and one that they were very confident that could establish a management team to take the assets and operate them responsibly for them. Our significant scale and local presence also provided transaction certainty for them, and we are flexible enough to structure a deal that met their particular needs.

The end result is a win-win for both parties. Jio receives significant upfront capital that they can reinvest back into their business, and we acquire a high-quality portfolio of newly constructed towers with an amazing counterparty and the ability to invest more capital into the business on an accretive basis.

The next major theme of focus that I want to touch on is the natural gas midstream opportunities. The energy sector, in general, is out of favor. This is because of volatile energy prices; the fact that with the pandemic, there's a current low demand for fossil fuels; and probably more importantly, the MLP structure is very out of favor in the United States. With few available alternatives to source capital, oil majors are selling their assets to private investors and infrastructure investors to redeploy capital back

Brookfield 2020 Investor Day Transcript | 9

into their core businesses and into new verticals like renewables. We like midstream assets because they have significant scarcity value, they typically are a highly contracted revenue basis, and they usually involve large capital outlays, which plays to our strengths.

To illustrate this, I thought, again, we'd go to a case study, and we'll profile our recent investment in Cheniere Energy Partners. With this investment, we gained exposure to Sabine Pass, which, as I mentioned earlier, is the largest LNG facility in the United States. It's a premier asset with 85% of its EBITDA contracted in U.S. dollars and underpinned by 18-year weighted average contract life. The counterparties are solid with a globally diversified investment-grade group of counterparties. And probably the most important thing is we believe that LNG is a critical bridge fuel for deep carbonization efforts in emerging markets. And we believe these efforts will only continue to gather momentum in the next number of years.

I think everyone is aware that Asia currently generates the vast majority of its energy needs through power plants driven by coal. As it's happened in North America, the transition away from coal will be supported both by renewables, as well as LNG. We were able to secure a 20% stake in the business because of our reputation as a good partner and the fact that we were able to move very quickly on the opportunity.

I mentioned earlier that we believe that there could be contrarian opportunities related to the transportation sector. There are no shortage of newspaper stories or academic papers that are speculating on the demise of international travel as well as international trade. We pride ourselves on our ability to take a long-term perspective and buy out-of-favor assets at good value. One of the most impacted infrastructure asset classes from the government shutdowns has been the airport sector. Air traffic, as you can see from the slide here, has dropped over 90% at many international hubs and the recovery for passenger travel, and this is just our most recent guess, is very long from now.

Many airports have raised capital in the short run to support their businesses and keep themselves going but with pending airline bankruptcies, and very uncertain futures, our expectation is that they'll need to raise capital from long-term investors like ourselves. We don't think there's a rush to get in here. But as the recovery for these businesses will take some time, but we definitely think this is a sector worth monitoring.

So now let's turn to capital raising. BIP raises capital from three sources. The first is operating cash flows that we retain in our business. This typically represents around 15% of FFO, which is about $200 million per annum. The second form of capital is the common equity, preferred shares and medium-term notes that we raised in the public capital markets. And then the third form of capital is generated from our capital recycling activities. And in the last two years, 60% of our capital raising has come through capital recycling. The current backdrop for capital recycling is very favorable.

In the past 12 months, we've sold four businesses at good values and achieved returns in excess of 15%. In a low interest rate environment, where investors are looking for secure, low-volatility returns, de-risked infrastructure assets will remain highly sought after. As a result, capital recycling is going to remain a very important part of our capital raising activities. In the next two years, we have a pipeline of sell mandates, where we expect to generate somewhere between $3 billion to $4 billion of proceeds from capital recycling. In the next five years, that could be $7.5 billion.

I do want to make one point, though. Don't be mistaken that capital recycling is the only way we're going to raise capital. We will continue to look for low-cost capital in the capital markets. For instance, just a week or two ago, we raised $200 million of perpetual preferred shares in the U.S. market at 5.125%. We will continue to look for those opportunities.

So now we're heading to the conclusion. I'll pull it all together, and I want to answer one question. Why invest in BIP? So first, BIP has utility-like cash flows that Bahir described for you. In addition to that, we

Brookfield 2020 Investor Day Transcript | 10

have a strong track record of creating value through active management of our companies, which Jenine hopefully made that come to life. And then the third component is the fact that we believe there's strong secular tailwinds for M&A growth. And as I mentioned, we're looking to accretively invest $2 billion of capital into our businesses to buy assets, enhance them and sell de-risked businesses to other investors.

So I'm going to take a little risk here and be a little cheesy. For investors looking to compound wealth over time in a low interest rate world and one with tremendous uncertainty, BIP is your grow-tility. Thank you very much.

Q&A - BROOKFIELD INFRASTRUCTURE PARTNERS L.P.

Sam Pollock, Chief Executive Officer, Brookfield Infrastructure Partners

So, we'll take a few questions here. So, the first question is, how do you marry being a long-term investor with your strategy to recycle stabilized assets?

Well, I guess, first, I'd say long term is in the eye of the beholder. When we make investments, we typically come up with a business plan for how we can generate value in the business. Sometimes, that can take a very long time. In other cases, the business strategy can be executed relatively quickly. And if we believe that there's an opportunity to get paid for a lot of future growth in the short run, then as stewards of capital, we'll consider that and sell assets even though it might be a great business that we'd love to hold forever.

Most of our businesses that we do acquire, we buy with partners. And so as a result of that, there typically is a finite length to how long we can own an asset. I think the most important thing to mention, though, is the mentality we have when we buy an asset. We don't just try and take steps to goose results in the short run. We take a very long-term perspective in how we look at the business and how we want the business to appear in the future. And so it's that long-term mentality that's probably the most important factor, not necessarily how long we hold the asset.

Okay. The next question here, I'm just going in order here. What piece of the digital infrastructure chain are you most excited about and how will you take advantage of that? Where does fiber fit into your portfolio thoughts?

Okay. So, I like many parts of the data infrastructure sector. As far as reliability and consistent returns and optionality around the assets, the tower sector is clearly very interesting. One of the challenges is valuation today. Obviously, people are competing aggressively for those type of assets, but those are great assets.

I also like our hyperscale data center business. That has a lot of the same attributes as almost an industrial warehouse development company. We have very solid customers and they're looking for our expertise to deliver a product to them very quickly. And so we've had great success in building that business out. And it's one, I think, there's going to be lots of growth potential in the future.

As it relates to fiber, fiber is an interesting asset class. One of the challenges you have with it is, in many cases, it does not come with a long-term contract. And so really what you're dependent upon is to make sure that there are significant barriers of entry when you have that type of business so that you cannot lose customers very easily and see your rates decline dramatically. So on the fiber side, we like businesses such as what we have in France, what we have in the U.K. where effectively, either it's a concession and the government has given us a monopoly over a particular region, or in the case of our U.K. business, we've been given the right to install the fiber to a customer's home and as a result, once it's in the ground, the cost of someone coming along to compete against us is very low. So, for new investments, we'll look

Brookfield 2020 Investor Day Transcript | 11

to replicate those sorts of barriers to entry so that we feel comfortable with the long-term sustainability of the revenue stream.

You noted transport opportunities and particularly airports due to negative sentiment. Is this view driven purely by valuation? And what has changed, positive or negative, to your thesis approach for airports as you've not made airport investments in the past?

Yes. Short answer is yes. It has to do with the valuation. In the past, the airport sector has always attracted a lot of low-cost capital. It is an excellent investment class because of the barriers to entry and in many cases, very favorable regulatory environment. Today, with a significant uncertainty around future air travel, valuations have come down. Now I'll caveat that with the fact that there hasn't really been a recent trade in the airport sector so time will tell if people will take the same view that we do. But our expectation is that there will be a number of groups who have maybe had too much exposure to the sector, looking to reduce that exposure, and that could create an opportunity for us to step in.

So I'm afraid no more questions I'm being told here. We're going to take a pause briefly, and I understand that Bruce will conclude the presentation from New York. Thank you very much.

Brookfield 2020 Investor Day Transcript | 12