Macquarie Infrastructure and Real Assets (MIRA) Macquarie Korea Infrastructure Fund Investor Presentation January 2019 STRICTLY CONFIDENTIAL
Important Notice DISCLAIMER This presentation and the information contained herein do not constitute any offer, solicitation, or advertisement of the securities of Macquarie Korea Infrastructure Fund (the “MKIF”) and does not constitute ‘solicitation’ as defined under the Financial Investment Services and Capital Markets Act of Korea. The MKIF does not have any intention to, and does not make, directly or indirectly, any offer or solicitation of its securities by this presentation. MKIF and Macquarie Korea Asset Management Co., Ltd.(“MKAM”) are not authorised deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia) and their obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of MKIF/ MKAM. This presentation is not an offer for sale of the securities of MKIF in the United States except in transactions exempt from the registration requirements of the US Securities Act of 1933 and the US Investment Company Act of 1940. This document may not be distributed in the United States and the Shares will not be offered or sold to persons in the United States. This presentation does not constitute a prospectus or other offering circular, in whole or in part. Any decision to purchase securities in the context of the offering of securities, if any, should be made solely on the basis of information contained in a published prospectus or other offering circular issued by the MKIF in connection with such an offering. This presentation contains certain “forward looking statements.” These forward looking statements that include words or phrases such as the MKIF or its management “believes”, “expects”, “anticipates”, “intends”, “plans”, “foresees”, or other words or phrases of similar import. Similarly, statements that describe the MKIF’s objectives, plans or goals also are forward-looking statements. All such forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Such forward-looking statements are made based on management’s current expectations or beliefs as well as assumptions made by, and information currently available to, management. There is no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation. Investments in MKIF are subject to investment risk, including possible delays in repayment or loss of income and/or capital investment. 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. STRICTLY CONFIDENTIAL MACQUARIE PAGE 1
Contents 1 MKIF Overview 3 A Leading Infrastructure Fund in Korea 4 Fund Evolution 5 Business Structure 6 Portfolio Summary 7 Concession Term and Government Support Period 8 Financial Position 9 Distribution 10 Investment Highlights 11 2 2018 Performance 12 Key Performance 13 Financial Results 14 Financial Position Statement 16 Performance of the Toll Road Assets 17 Busan New Port Phase 2-3 (BNP) 18 The New Port 19 Litigation Status 20 3 SCH Transaction 21 SCH Transaction Highlights 22 Seoul-Chuncheon Highway Overview 23 SCH Transaction Summary 24 A Appendix 25 STRICTLY CONFIDENTIAL
1 MKIF Overview STRICTLY CONFIDENTIAL
A Leading Infrastructure Fund in Korea Established in 2002 / Listed on the Korea Exchange in 2006 Market capitalization of KRW ~3.4 trillion 1 Invests only in Korea as defined under the Korean PPI Act 2 Delivered approximately ~6.7% distribution yield 3 in 2018 Issuer credit rating of AA0 (Stable) 4 Key Shareholder Groups 5 Top Shareholders 6 1. Newton Investment Management 8.2% International investors 2. Hanwha Group of Companies 7 7.4% 25.5% 3. Shinyoung Asset Management 5.0% Domestic institutions * Macquarie Group 3.6% 47.6% Retail 26.9% 1. As at 31 January 2019 2. Act on Public Private Partnerships in Infrastructure (“PPI Act”) defines infrastructure sectors including roads, railways, ports, energy, airport, communication, water resources, etc. 3. Distribution yield based on FY2018 closing share price of KRW 9,290 and FY2018 distributions; historical performance does not guarantee future performance 4. Issuer credit rating by NICE Investor Service on 6 April 2018 5. As at 31 December 2018 6. Source: Financial Supervisory Service (over 5% holders and affiliates as at 31 December 2018) 7. Includes Hanwha General Insurance, Hanwha Life Insurance and Hanwha Asset Management STRICTLY CONFIDENTIAL MACQUARIE PAGE 4
Fund History Only listed infrastructure fund in Korea / Largest portfolio of toll roads in Asia Mandate Portfolio Market capitalisation Establishment/Listing KRW ~3.4 trillion 1 Core / Core+ 11 toll roads/1 port 2002 / 2006 (Korean only) (all concessions) (KOSPI top 78) MKIF history Pioneered best practice infrastructure fund management in Korea, serving as an education platform for local financial institutions 2002 2003 - 2006 2006 2007 - 2016 2017 - 2018 MKIF established Capital raising and IPO & Listing Active asset and capital Share offering investments management 4 investments 2 / 4 divestments 3 Investment in 14 toll roads & IPO (KRW 1.0 tn) 1 Follow-on offering 1st raising (KRW 247.3 bn) 1 subway line (KRW 147.2 bn) Dual listing on KRX and 7 fund-level debt refinancing 4 19 investors (17 domestic) 2 Investments 2 LSE 1 10 project company-level refinancing 1 fund-level debt refinancing 4 (including securitization) 5 5 dispute resolutions 6 3 project company-level refinancing 5 1. KRW 0.6 tn = issuance of new shares, KRW 0.4 tn = sale of old shares / MKIF delisted from LSE in March 2016 2. 2008: BNP initial investment & MCB additional investment, 2013: BNP additional investment, 2015: YSE additional investment, 2017: IGB additional investment; 2018: SCH additional investment 3. 2008: New Daegu Busan Expressway, 2010: Seosuwon-Osan Pyungtaek Expressway, 2012: Daegu 4th Beltway East, 2013: Subway Line 9 4. Refer to the disclosures on MKIF website (www.mkif.com) on 14 May 2007; 10 April 2009; 30 November 2009; 19 May 2011; 16 June 2011; 7 February 2014; 26 May 2016; and 11 June 2018 5. Refer to the disclosures on MKIF website (www.mkif.com) on 14 February 2007 (Daegu 4th Beltway East); 7 January 2008 (BYTL); 15 December 2008 (WIC); 26 March 2009 (IGB); 18 March 2010 (CNEC), 18 November 2010 (MCB); 24 August 2015 (NAHC); 23 October 2015 (YSE); 14 January 2016 (WIC); 16 December 2016 (KBICL); 02 January 2017 (MCB), 14 August 2017 (IGB), 28 June 2018 (SCH) 6. Refer to the disclosures on MKIF website (www.mkif.com) on 10 October 2014 (SICL&BYTL); 6 April 2015 (MCB); 3 June 2016 (SICL&BYTL); 10 November 2016 (SICL); and 16 December 2016 (KBICL) STRICTLY CONFIDENTIAL MACQUARIE PAGE 5
Business Structure (As at 31 December 2018) MKIF is a holding company of 12 infrastructure project companies Active management of the underlying project companies 1 Underlying MKIF Fund is managed by Macquarie Korea Asset Management Co., Ltd. (“MKAM”) Project Companies Shareholding MKIF corporate tax exempted when 90% or more of its distributable earnings is distributed Baekyang Tunnel 100% Ltd. Kwangju Beltway 100% Investment Co., Ltd. Shareholders New Airport 24.1% Hiway Co., Ltd. Soojungsan 100% Investment Co., Ltd. Invests in: Invest Distribute Cheonan Nonsan 60% Equity Expressway Co., Ltd. Subordinated debt Senior debt Woomyunsan Corporate Debt 36% Infraway Co., Ltd. MKIF • Credit facility (KRW 250 bn) 2 • Corporate bonds (KRW 200 bn) 3 Receives: Kwangju Ring 75% Road Company Ltd. Interest / Principal Dividend MCB Co., Ltd. 70% Management Agreement Gyeogsu Highway 43.75% Co., Ltd. Seoul-Chuncheon 15.83% Highway Co., Ltd. MKAM (Manager) Incheon Bridge 64.05% Co., Ltd. 1. MKIF-invested project companies BNCT Co., Ltd. 30% 2. Out of KRW 250 bn credit facility, KRW 82.6bn is drawn 3. KRW 100 bn, 5-year bond (maturity date of June 2023) and KRW 100 bn, 7-year bond (maturity date of June 2025) STRICTLY CONFIDENTIAL MACQUARIE PAGE 6
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