2i rete gas - debt investor presentation

July 2014Debt Investor Presentation

2

Disclaimer

� This presentation has been prepared by and is the sole responsibility of 2i Rete Gas S.p.A. (the “Company” or “2iRG”). As used herein, “Presentation” means this document, any oral presentation, the question and answer session and any written or oral material discussed or distributed during the presentation. The Presentation comprises written material/slides which provide information already available to the public on the Company, its Holdcos and its subsidiaries (together, the “Group”). The information contained in this Presentation has not been verified, approved or endorsed by or independently verified by any independent third party. Save where otherwise indicated, the Company is the source of the content of this Presentation. Care has been taken to ensure that the facts stated in this Presentation are accurate, and that the opinions expressed are fair and reasonable. However, no representation or warranty, express or implied, is made or given by or on behalf of the Group, or the management or employees of Company, or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this document or any other material discussed at the Presentation. None of the Company nor any of its subsidiaries nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection therewith.

� This Presentation is not intended for potential investors and does not constitute, or form part of, any offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of, or any solicitation of any offer to underwrite, subscribe for or otherwise acquire or dispose of, any debt or other securities of the Company, Holdcos or any of its subsidiaries (“securities”) and is not intended to provide the basis for any credit or any other third party evaluation of securities nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment whatsoever. If any such offer or invitation is made, it will be done so pursuant to separate and distinct documentation in the form of a prospectus, or a translation of the prospectus into English language (a “prospectus”) and any decision to purchase or subscribe for any securities pursuant to such offer or invitation should be made solely on the basis of such prospectus and not this Presentation.

� The information and opinions contained in this Presentation are provided as at the date of this presentation and are subject to change without notice.� This Presentation is not an offer of securities for sale in the United States or any other jurisdiction. Neither this Presentation nor any part or copy of it may be taken or transmitted into the United States or distributed,

directly or indirectly, in the United States as that term is defined in the U.S. Securities Act of 1933, as amended (the “Securities Act”). Neither this Presentation nor any part or copy of it may be taken or transmitted into Australia, Canada or Japan, or distributed directly or indirectly in Canada or distributed or redistributed in Japan or to any resident thereof. Any failure to comply with this restriction may constitute a violation of U.S., Australian, Canadian or Japanese securities laws. The distribution of this Presentation in other jurisdictions may be restricted by law and persons into whose possession this Presentation comes should inform themselves about, and observe, any such restrictions. The Company’s securities have not been and will not be registered under the Securities Act and may not be offered or sold in the United States except pursuant to an exemption from, or transaction not subject to, the registration requirements of the Securities Act.

� This Presentation includes certain forward looking statements, projections, objectives and estimates reflecting the current views of the management of the Company with respect to future events. Forward looking statements, projections, objectives, estimates and forecasts are generally identifiable by the use of the words “may”, “will”, “should”, “plan”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “project”, “goal” or “target” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts, including, without limitation those regarding the Group's future financial position and results of operations, strategy, plans, objectives, goals and targets and future developments in the markets where the Group participates or is seeking to participate. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward -looking statements as a prediction of actual results. The Company's ability to achieve its projected objectives or results is dependent on many factors which are outside management's control. Actual results may differ materially from (and be more negative than) those projected or implied in the forward-looking statements. Such forward-looking information involves risks and uncertainties that could significantly affect expected results and is based on certain key assumptions.

� All forward-looking statements included herein are based on information available to the Company as of the date hereof. The Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.

� This Presentation is strictly confidential and is being provided to you solely for your information and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purpose without the prior written consent of the Company. By attending this Presentation you agree to be bound by the foregoing limitations and represent that you are a person who is permitted to receive information of the kind contained in this Presentation. Furthermore, by attending this Presentation you represent being aware of all requirements and limitations provided by applicable securities laws and regulations regarding the distribution and dissemination of information or investment recommendations and you undertake not to breach any of such provisions. None of the Company, or any of their respective affiliates, members, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection therewith, including any liability deriving from the breach by you of your duty to confidentiality.

� This Presentation is exempt from the general restriction (in section 21 of Financial Services and Markets Act 2000) on the communication of invitations or inducements to engage in investment activity pursuant to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO") on the grounds that it is intended for distribution in the United Kingdom only to persons who (i) are qualified investors (within the meaning of the Prospectus Directive 2003/71/EC) and (ii) who have professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the FPO and/or to high net worth bodies corporate, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2)(a) to (d) of the FPO or to those persons to whom it may otherwise be lawfully communicated (in each case referred to as "Relevant Persons "). The information contained in this Presentation is not intended to be viewed by, or distributed or passed on (directly or indirectly) to, and should not be acted upon by any class of persons other than Relevant Persons. It is a condition of your receiving this Presentation that you represent and warrant to the Company that (i) you are a Relevant Person; and (ii) you have read and agree to comply with the contents of this notice. In the event that a person who is not a Relevant Person receives this Presentation, such person should not act or rely on this Presentation. Neither the Company, not any other member of the Group or affiliates, nor any adviser or person acting on their behalf shall (without prejudice to any liability for fraudulent misrepresentation) have any liability whatsoever for loss however arising, directly or indirectly, from the use of information or opinions communicated in relation to this Presentation.

3

Table of Contents

1. INTRODUCTION

2. CREDIT HIGHLIGHTS

3. FINAL REMARKS

4. APPENDIX

Introduction

5

Today’s Speakers

� In 2iRG since 2009

� 12 years of experience in the sector

� Previous experience

� CFO of Italcogim Energie GdFSuez group

� British Gas

� Marconi Communications

Antonio PettiniChief Financial Officer

� [Foto]




� CEO and COO of Rodriquez Cantieri Navali – IntermarineS.p.A

� COO of Piaggio

� CEO and COO of COS- Gruppo ALMAVIVA

� Operating Director of Telecom Italia Mobile and Managing Director of a Business Unit (“Private Clients Telecom”)

Gianclaudio NeriChief Executive Officer

[Foto]




� “Head of Tender Offers and Concessions” division and responsible for the regulatory relationships management with AEEGSI

� Enel Distribuzione Gas

� So.Ge.Gas S.p.A.

� Camuzzi Gazometri

Gianni RossettoHead of Regulatory Affairs

6

2iRG at a Glance

� 2iRG is an independent gas distribution operator in Italy , with a widespread and geographically diversified network of concessions over the whole Italian territory

� In 2013, 2iRG generated €846m revenues (including €116m for IFRIC 12 effect) and €383m EBITDA

� 2IRG is controlled by infrastructure funds managed or advised by:� F2i, an institutional long term investor� ARDIAN, a premium independent private investment company� Both F2i and ARDIAN are long term financial investors with a

strong industrial approach to foster business development and qualify clearly as “strategic investors”

75.0% 25.0%

F2i I Finavias

FRI

85.104%(2)

55.0% 45.0%

F2i II Axa I. H.(1)

FRI 2

14.802%(2)

Regional presence (#) 18

ATEM presence (#) 137(5)

Re-delivery points (“rdp") (m) 3.8

Distributed volumes (bcm) 5.9

Municipalities under management (#) 1,961

Employees (#) 2,042

Net Invested Capital (€ bn) 2.5

Grid extension ('000 km) 57

Gross capex (€ m) 136

Source: Company data. Note: (1) AXA Infrastructure Holding; (2) 0.094% Minorities and treasury shares; (3) The Group including subsidiaries GP Gas S.r.l., Italcogim Velino S.r.l. (in liquidation) and Italcogim Trasporto S.r.l.; (4) 2013 data; (5) Out of 177 “multi-municipality areas” (Ambiti Territoriali Minimi or “ATEMs”),indicated by the Ministry of Economic Development (“MED”)

The Group (3)

Current Group Structure

Main Operating Data (4)

2iRG is the #2 player in the Italian gas distributi on market

2iRG Corporate History

2000

�Enel Rete Gas (today 2iRG) entered the gas distribution business

�80% of 2iRG acquired from Enel

�In December, Enel minority in 2iRG bought out through FRI2

2009 2011 2013

� Acquisition E.On Italia distribution gas and G6 Rete Gas

~2.2m

~1.6m

Clients growth

~3.8m

Credit Highlights

8

Credit Highlights

2# largest gas distribution operator in Italy and w ell positioned to drive further market consolidation

1

Stable and supportive regulatory framework with no volume exposure

2

Predictable financial performance and strong liquid ity

3

Experienced management team with a strong track re cord of business integration

4

9


1


2


3


4

10

Overview of Italian Gas Market

Liberalized market with an independent regulatory Au thority

1

StorageTransport (national

and regional)Distribution

Retail sales and small/medium

industriesImport

Production

62.0 Capacity: 15.6 70.1 34.4

Industrial users Power stations

Data in bcm(2013)

Upstream Midstream Downstream

Market structure

Players•Eni, Edison, Enel and others

•Snam (Stogit), Edison •Snam (Snam Rete Gas), SGI

•Snam (Italgas), 2iRG, Hera, A2A and others

•ENI, Enel ,Edison and others

Concentrated market with opportunistic competition Fragmented market with accelerated consolidation

Market dominated by few players

Value chain

Regulatory Authority

• Authority for Electricity, Gas and Water (“AEEGSI”)•Tariffs; Access conditions and Quality of service and safety

7.7 21.214.5

Source: MED and Company Data

34.4

11

Italy is the 3 rd Largest Gas Market in Europe…

� With a total natural gas consumption of 70.1 bcm, Italy is the third largest European market after Germany and UK

� The relative weight of infrastructure costs, as part of the Italian gas price composition, is the lowest across the main European countries (15%)

� In particular, the impact of the distribution infrastructure on the end users’ price is very limited (12% in total, including system charges)

One of the largest gas markets with low infrastruct ure costs

1

88.579.2

70.1

46.140.3

30.9

Germany UK Italy France TheNetherlands

Spain

Gas Consumption in EU (Data in Bcm, 2013) – Top Six Countries

45.34 50.36 42.12 39.69 36.70 36.63

14.0119.31

15.80 18.8012.51 12.21

30.93 13.43

14.29 10.4416.31 2.91

1.560.84 3.01

0.702.45

6.39

Italy Spain Belgium France Germany UK

58.1467.9769.6375.2283.9491.84

Data in € cents/cm

Natural Gas Price Analysis – European Comparison

Raw material and commercial Tax System chargesInfrastructure Raw material Tax System chargesInfrastructure Commercial-Retail

Commercial-Wholesale

3.7%

10.4%

1.2%

Infrastructure

Distribution

Transport

Storage

15.3%

41.5%

3.9%3.9%

33.7%

1.7%

Breakdown of Natural Gas Price in Italy

Source: Company data and Elaboration of AEEGSI Annual report 2013

12

…With a Still Fragmented Gas Distribution Market…

� Main players within the Italian markets are: (i) large Italian energy and utility players, (ii) local utilities; (iii) small operators controlled by local municipalities and (iv) private companies

� Over the last few years, the market has experienced a consolidation wave that reduced the number of distributors (from 780 in 2000 to 229 in 2013)

� Although the number of players remains sizeable, the market is increasingly concentrated: the 35 “very large” and “large” players control 83% of the market in terms of volumes distributed

� Legislative framework in place to achieve further consolidation with the creation of 177 ATEMs

Italgas >50%

2iRG>50%

IREN>50%

A2A>50%

Ascopiave>50%

Hera>50%

Toscana Energia>50%

1st distributor < 50%

Other distributors >50%

No gas area

Size Pdr (#) Distributors (#)Volumes

Distributed

Very large > 500 k 8 (5 groups) 57%

Large < 500k ; > 100k 27 26%

Medium < 100k ; > 50k 19 6%

Small < 50k ; > 5k 112 10%

Very small < 5k 63 1%

Source: AEEGSI, MED and Snam Rete Gas dataNote: (1) Based on 177 ATEMs

A consolidation process is under way where size is a key factor

Geographical Split and Distributors’ Clusters (1)

Evolution of # Distributors (2000-2013)

1

-71%

?

780716 693

560480

430360 338

295259 246 239 236 229

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2019

13

Market Shares by Network Length (1) (2013)

� 2iRG is the 2 nd largest gas distribution operator in Italy

� Distribution network consisting of approx. 57,000km

� Distributing approx 5.9bcm of gas in 2013

� 3.8m customers across 1,961 municipalities

Mkt share%

23%

22%

6%

3%

3%

3%

2%

2%

35%

In ‘000 km

Others

Mkt share%

17%

6%

5%

4%

2%

2%

1%

35%

In m

Others

Source: Company data and AEEGSINote: (1) Italgas data includes 100% Napoletana Gas, 49% AES, and 48% Toscana Energia; Hera includes 100% Acegas-APS; IREN includes 100% IREN Emilia and Genova Reti Gas and 51% AES; (2) Including GP Gas network

2iRG is well positioned to grow in the Italian mark et thanks to the upcoming tender process

Market Shares by Rdp (1) (2013)

28%

…Where 2iRG Plays a Leading Role

2iRG Presence

(2)

89.6

5.8

6.2

6.6

7.5

8.2

16.0

56.6

57.1

1

2

3

4

5

6

7

8

9

7.9

0.3

0.4

0.5

0.9

1.2

1.4

3.8

6.5

1

2

3

4

5

6

7

8

9

Low concentration risk

� Perugia concession: 2%

� Top 3 concessions: 5%

� Top 10 concessions:11%

>50%

<25%

25-50%

Presence in 137 ATEMs

Market share

1

14


1

Key Take-Aways

� 2nd Italian player in the gas distribution market with a market share of ~17% in terms of rdp

� Widespread distribution network throughout the country

� Economies of scale, high barriers to entry and high efficiency

� Automatically extended existing concessions so far as all the related tenders are not executed and closed (“prorogatio”)

� Positioned as a long-term winner in the industry consolidation resulting from the ATEM reorganisationprocess

� Benefits from profitability improvements linked to the rationalisation of current concession areas

Key Factors Impacts

1

15


1


2


3


4

16

Remuneration Regime: a Transparent and Established Methodology

Local Net Invested capital or “Local RAB” (Historical revaluated cost )

WACC Distribution:

6.9%

WACC Metering: 7.2%

The depreciation is calculated based on depreciation schedules provided by the

Regulator and differentiated for each asset category

Distribution activities

Metering activities Commercial

activities(addressed to

gas sales companies)Metering

reading activities

Regulator applies a € amount per redelivery point

% weight on revenues

Centralised Net Invested capital or “Centralised RAB” (i.e. IT, headquarters etc,

calculated by a parametric approach)

Allowed Revenues or VRT (“ Vincolo Ricavi ”)

Return on RAB Depreciation Operating Costs

RAB WACC Technical Life of the Assets Distrib.on Metering Comm.al

35%

30%

~35% ~35% ~30%

�Regulation protects from volume risk�RAB and Depreciation yearly updated by gross invest ment deflator

�Operating costs updated yearly by CPI and X-factor

2

17

Stable and Supportive Regulatory Framework

Continuity of methodology ensures high predictabili ty and preserves the attractiveness of the business

2

IV Regulatory Period (2014–2019)

� Revalued historical cost method confirmed� Parametric methodology confirmed� Subsidies and contributions are subtracted from the RAB at 80%� (t-1) capex recognised in RAB� Payment for acquisition of new concessions by tender integrally included in

RAB

RAB

� Distribution: 6.9%� Metering: 7.2%� Calculation of WACC revised every two years (update of risk free rate i.e. Italian

10 year Italian BTP)

Return onRAB (WACC)

� Opex calculated on the basis of size of operator and client density confirmed� Efficiency factors:

� Distribution: 1.7% (up to 2016)� Metering and Commercialization: 0.0% (up to 2016)� Revision every three years

Opexand

Efficiency X-Factor

Protective termination compensation

mechanism

� The out-going distributor is remunerated with the residual industrial value of the assets (“VIR”)

� Once VIR is paid, it represents the reference value for tariff calculation (i.e. RAB)

Key Items

Timely recovery of operating expenditures including

depreciation and a fair return on investments

Continuity in CAPM and risk free parameters and clear review

process

Regulation framework designed to support efficiency and economy of

scale

Robust compensation mechanism mitigating the financial / capital structure aspects of concession

termination risk

18

Clear Legislative Framework for ATEM Tender Process

From a fragmented to a more concentrated and efficient distribution of

concessions

� Starting from the end of 2011, the Italian market has been divided into 177 ATEMs (from current 6,989 municipalities). For each ATEM, a 12-year concession will be assigned through public tenders

� Most of existing “old regime“ concessions expired in 2012 but were automatically extended until tenders are executed (“prorogatio”)

� A tender process timetable for these ATEMs was set by Law (DM 266/11)� The likely timetable for the completion of the ATEM tenders is around 4-5 years� Assets owned by operators transferred to the new operator upon payment of a redemption value (as

envisaged by Law)

New tender process favours the largest players enabl ing an optimisation of the concessions portfolio, an increase of returns and a reduction of concession renewal risk

Criteria for assessing the ATEM tenders

The larger Incumbent operators in the new ATEM concession areas will have a competitive

advantage

Not the key determinants of ATEM concession awards

Qualitative and Operational factors

Economic factors

2

��

��

19


2

Key Take-Aways

� Regulatory period from 4 yrs (2009-2012) to 6 yrs(2014-2019)

� AEEGSI: Independent regulatory Authority

� Simple and transparent RAB-based system

� Protective termination compensation mechanism

� Sector consolidation through ATEMs

� Regulation as incentive to optimise costs

� Predictable financial and operative cash flow policy

� Optimised capex planning due to RAB remuneration and recovery value at termination

� Growth opportunity for large players with credit protection deriving from terminal value (VIR)

Key Factors Impacts

2

20


1


2


3


4

21

Predictable Financial Performance and Strong Liquidity

Revenues and EBITDA (in € m)

Funds From Operations and FFO/Adj Net Financial Deb t (in € m)Net Invested Capital and Adjusted Net Financial Deb t (in € m)

� Stable revenue trend historically, while increasing EBITDA thanks

to cost optimisation from 2012 to 2013. 2011 includes 3 months

consolidation of E.On Italia distribution gas and G6 Rete Gas

� Stable level of invested capital and Adjusted Net Financial Debt

� Increasing level of Funds From Operations sustained by improving

operating performances

� The new regulatory period provides visibility for the next 6 years

notwithstanding an initial impact on revenues and EBITDA

Fully regulated revenues and EBITDA

Note: (1) Revenues net of IFRIC 12 revenues; (2) Excluding extraordinary items; (3) Extraordinary items

2,536 2,436 2,456

1,654 1,584 1,588

-

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

2011 2012 2013

Net Invested Capital Adj Net Financial Debt

Note: (4) Net Invested Capital including negative fair value of IRS hedging. Adjusted Net financial debt excluding derivative liabilities and residual liability for IRS unwinding

470

715 730

272367 383

367 79

57.8%51.4% 52.4%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

60.0%

-

200.0

400.0

600.0

800.0

1,000.0

1,200.0

2011 2012 2013Revenues EBITDA Net Income margin%

33(3)

33(3)

96

234 2485.8%

14.7% 15.6%

-40.0%-30.0%-20.0%-10.0%0.0%10.0%20.0%30.0%40.0%

-50.0

100.0150.0200.0250.0300.0350.0400.0450.0500.0

2011 2012 2013

FFO FFO/Adj. Net Debt%Note: (5) Cash Flow from Operating activities excluding change in working capital and including cash net financial charges

54.7%(2)

3

(1)

(4) (4) (5)

22

Low Risk Payment and Settlement System

Revenue Breakdown by Clients (1)

47%

16%

11%

4%

2%

20%

Others

Source: Company data. Note: (1) Ratings S&P/Moody’s/Fitch; (2) 2013 distribution revenues

(BBB/Baa2/BBB+)

(A/A1/n.a.)

(A-/A3/A-)

(A/A3/A+)

(BBB+/Baa3/n.a.)

Tot.:€591m(2)

…high quality clients limit counterparty risk

While regulation protects from volume risk…

Regulation Protects from Volume Risk

� VRT is defined every year

� Monthly billing to gas sales companies based on delivered volumes

� Adjustment (equalisation) between VRT and actual revenues (total billed yearly amount)

� Billing on a monthly basis

� According to the agreement with traders “Access Code”:

� Payments are settled in 60 days from gas distribution service

� Bank guarantees cover 25% of the yearly billed amount related to each gas sales company

“Access Code” Provisions Protect from Bad Debts

3

23

Prudent Financial Practices

Interest rate policy

� The Group targets a capital structure with a minimum level of 65% of fixed rate debt

� The remaining floating rate exposure will not be hedged as the Company considers its WACC-related revenues as a natural hedge

� BBB/negative (S&P)(1), Baa2/stable (Moody’s)

� 2iRG required to keep a solid investment grade credit profile by its shareholders

� The shareholders aim to maintain a low risk investments profile in line with other assets owned by them and other infrastructure funds in the market

Leverage and rating

Management strongly committed to financial discipli ne

Dividend policy� 2iRG is planning to give regular and predictable cash returns to its shareholders in the form of cash dividends

according to the overall leverage and rating policy

Capex policy

� Significant discretion over the scheduling of capex programme

� Flexibility over the ATEM investment plan

� Optimised capex planning due to RAB remuneration and recovery value at termination

3

� The Group is cash positive and the working capital facility has never been drawn over the last 3 years

� Liquidity is managed through banking facilities raised in the ordinary course of business and cash on the balance sheet

� Additionally, the refinancing package envisages a €400m combined capex and working capital facility

Liquidity

management

Note: (1) Preliminary rating

24

Key Rating Highlights

� “The Baa2 issuer rating reflects the company's fairl y low risk business profile . The rating incorporates (1) company's focus on regulated gas distribution a ctivities , backed by a credible and supportive regulatory framework, which ensures a high degree of cost recovery and a fair remuneration of investments and capital base and has been consistently applied for more than 10 years by AEEGSI, the Italian independent regulatory body for energy and water sectors; (2) no volume risk as distribution networks tariffs are entirely based on capacity , and limited affordability concerns, as gas distribution charges account for 14% of householders' bills; (3) a high degree of operating efficiency , as the company consistently received technical rewards allocations and was able to outperform its regulatory operating expenses allowance in recent years; (4) limited investment burden , as 2iRG expects to run a capital expenses programme of EUR1.6 billion between 2014-19, ie., 8% to 10% of the existing fixed assets base on an annual basis, on a number of small-scale interventions of modest technical complexity.”

� “Our business risk profile assessment reflects our v iew of 2i Rete Gas' low-risk regulated operations in the gas distribution sector and our a ssessment of Italy's regulatory framework as solid and transparent, insulating Italian regulated gas distribution utilities from the country's weak economic fundamentals . In our view, the business risk profile is constrained by some uncertainty over the outcome of the gas concessions retendering process in Italy over 2014-2016, in relation to which the issuer intends to concentrate its presence on a smaller number of service areas (so-called ATEMs) where it would fully manage the concession and improve the potential for cost synergies with a positive impact on the profitability of operations. These risks are mitigated by our view that the conc ession retendering process will result in a substantial consolidation of the currently highly fragmented gas distribution market in Italy where we would expect 2i Rete Gas to remain a preeminent player .”

� “The negative outlook reflects that on Italy. We believe that 2i Rete Gas' capacity and willingness to meet its debt obligations is currently not superior to the sovere ign's, owing to the refinancing risk linked to the group's bridge-to-bond facility , which it intends to refinance in the market in 2015.”

Standard & Poor’s

BBB / Negative Outlook (1)

Moody’s

Baa2 / StableOutlook

3

Note: (1) Preliminary rating

25

Supporting Growth and Preserving Sounding Capital Structure

� Bond : size and tenor to be determined� Bridge : 12 + 6 + 6 months tenor up to €600m� Term loan : €750m with 5 year tenor� Capex/RCF : respectively €300m and €100m committed facilities

(5 year tenor)

Current Debt Structure (2) Post Refinancing Debt Structure (2)

Refinancing Main Goals

� Well positioned within investment grade credit rating (S&P(1): BBB; Moody’s: Baa2)

� EMTN programme established

� Group of 6 major banks committed to subscribe €1.75bn credit lines (of which €0.4bn Capex/RCF line). Facility Agreement expected to be signed shortly

89%

9%2%Bank facilities - 2iRG

Bank facilities - FRI2

Bank facilities - FRI

Bank facilities

Bond + Bridge

� Term loan 2iRG : €1,750m with 5 year tenor (expiry 2018)� Term loan Holdcos : €210m with 5 year tenor (expiry 2018)� Capex/RCF : respectively €300m and €40m committed facilities (5

year tenor, expiry 2018)

�Seek a maturity coherent with business profile

�Establish access to Capital Markets

�Financial Flexibility

Note: (1) Preliminary rating; (2) Including financial debt at FRI and FRI2 level

Capital Market to become a stable/long-term source of

funding

~60%

~40%

3

26

Corporate Reorganisation

Merger at HoldCos level Merger between HoldCo and 2iRG1 2

• Merger by incorporation of FRI2 to FRI

• The process is expected to be completed in a few weeks time

• Merger by incorporation of 2iRG in FRI (renamed 2iRG)

• The process is expected to be completed by the end of December 2014 since all the usual merger formalities are required

�Streamlining corporate structure

�Process expected to be completed by the end of 2014

F2i I Finavias

FRI

99.906%(1)

100.0%

F2i IIAxa I.

Fund III

Step 1

F2i I Finavias

99.906(1)%

F2i IIAxa I.

Fund III

Step 2

Note: (1) 0.094% Minorities and treasury shares

3

27


3

Key Take-Aways

� Excellent track record of financial and economic performances

� Strong liquidity profile

� Low cash flow volatility

� Solid balance sheet

� Strong focus on cost optimisation

� Debt structure consistent with cash generation profile

Key Factors Impacts

3

28


1


2


3


4

29

Experienced Management Team

Headquarter

Local operations

CEO

HR

COO

6 regional departments

29 local units

Reg

iona

l of

fices

Loca

l uni

ts

CFO Business Development

Integration

Legal Audit

Procurement

Solid and lean organization strengthening local cont rol and efficiency

� Following the acquisitions of E.OnRete and G6 Rete Gas, the 2iRG management has implemented a new successful organization:

� Deliver financial targets

� Deliver operational efficiencies

� Harmonize organizational processes

� Management and organizational structure already designed to approach the next round of concessions’ tenders in a successful way

4

Regulatory Affairs

30

0

5

10

15

20

2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

� Main acquisitions completed:

� Gruppo Camuzzi (2002): approx. 1,000k clients

� E.On Rete (2011): approx. 600k clients

� G6 Rete Gas (2011): approx. 1,000k clients

� Significant efforts to integrate all acquired companies in terms of organisational structure, approach with local municipalities, ICT, accounting and administrative systems

Jan. 2000 By 2002

Clients, in ‘000~3,800

Source: Company data

F2i and ARDIAN

Acquisitions And Integrations Completed

Successful Track Record of Business Integrations and Synergies

4

Significant experience in delivery integration targ ets

2013

Synergies

� Internalization of staff functions

� One integrated Headquarter and full internalization of previously out-sourced services

�Rationalize and industrialize field operations

� Rationalize organizational structure on the Field and introduction of IT tools to manage local workplace remotely

€ m

By 2009

E.On ReteG6 Rete

Gas

40 companies acquired by 2002

70 companies acquired through E.On Rete and G6 Rete Gas

~120 companies acquired

9 companies acquired by 2009

First acquisition

31

Disciplined Investment Policy for Sustainable Growth

2iRG plans to grow while protecting a solid credit profile

1Growth through ATEM

tenders in Italy

� Supportive regulatory framework addressing concessions’ renewal, market concentration and asset value protection

� Dominant position in north-western and south-eastern Italy, where the 2iRG will strengthen its presence and leverage any potential economy of scale

� Optimisation of concession portfolio

2Investments to

increase profitability in a mature business

� Capex driven by new redelivery points as well as maintenance of the existing network

� Pioneer in adoption and deployment of smart metering

3More competitive

cost structure

� Continuous focus on operating and technical excellence

� Reaping the benefits from significant in-sourcing after ownership changes and synergies from integration

� Economies of scale arising from ATEM tenders

� Savings from investments in electronic meters and ICT infrastructure

4

~ €1.6bn of investment plan up to 2019

32


4

Key Take-Aways

� Steady and cohesive management team

� A proven track record in terms of business integration and operating efficiencies

� Management expertise based on large/top tier energy players in previous experience

� Continuous optimisation of cost structure and tight financial control

� Integration and in-sourcing completed

� Ability to manage the upcoming intense ATEM tenders period

Key Factors Impacts

4

Final Remarks

34

Credit Highlights


1


2


3


4

Appendix

36

Key Financials

P&L

€m 2012 2013Distribution and other 591.6 590.9Connection fees 24.0 22.4Other sales and services 19.7 23.2IFRIC 12 133.0 116.4Other revenues 79.6 93.3

Total Revenues 848.0 846.3Labour cost (110.2) (111.3)Raw material cost (31.4) (32.0)Service cost (256.3) (226.4)Other costs (64.4) (76.3)Provisions (20.1) (18.5)Incr. in fixed assets not subject to IFRIC 12 1.7 0.9

Total costs (480.7) (463.6)EBITDA 367.2 382.6EBITDA % (ex IFRIC 12 impact) 51.4% 52.4%EBIT 216.4 238.5EBIT % (ex IFRIC 12 impact) 30.3% 32.7%Net Income 67.3 79.2

Balance Sheet

€m 2012 2013

Net fixed assets 2,381.5 2,388.5

Net working capital 62.1 97.9

Total provisions (7.4) (30.2)

Net invested capital 2,436.2 2,456.2

IRS unwinding 36.2 30.2Net Financial Position 1,584.1 1,587.8

Shareholders' equitiy 816.0 838.2Total Sources 2,436.2 2,456.2

2i rete gas - debt investor presentation

Presentations & Public Speaking