attracting financial sector participation in...

STRICTLY CONFIDENTIAL

Attracting Financial Sector Participation in Mongolia

Macquarie‘s Asia Experience

August 2017

The material in this presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (Macquarie) and is general background information about Macquarie‘s activities current as at the date of

this presentation. This information is given in summary form and does not purport to be complete. Information in this presentation, including forecast financial information, should not be considered as advice

or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities or other financial products or instruments and does not take into account your particular

investment objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to these matters, any relevant offer document

and in particular, you should seek independent financial advice. All securities and financial product or instrument transactions involve risks, which include (among others) the risk of adverse or unanticipated

market, financial or political developments and, in international transactions, currency risk.

This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to Macquarie‘s businesses and operations, market conditions,

results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Readers are cautioned not to place undue reliance on these forward looking statements.

Macquarie does not undertake any obligation to publicly release the result of any revisions to these forward looking statements to reflect events or circumstances after the date hereof to reflect the occurrence

of unanticipated events. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are

subject to uncertainty and contingencies outside Macquarie‘s control. Past performance is not a reliable indication of future performance.

Important information

01 Divider title goes here 3

02 Divider title goes here 8


Contents

1. Macquarie Group overview 5

2. Macquarie‘s presence and experience in Asia 12

3. Asia outlook and opportunities 23

4. Mongolia: Future prospects and opportunities

for the financial sector

31

Key Takeaways

Governments have a key role to play in providing the right regulatory environment but its best when they work in

partnership with the private sector

Boring old infrastructure has the potential to transform capital markets in emerging economies

Finance sector opportunities often arise from political, demographic and geopolitical challenges. Disruption is

sometimes a good thing

Financial institutions don't just do finance, they often build ―adjacent‖ businesses

Domestic financial institutions and corporates should consider partnering with niche players rather than generalist

financial institutions

Scale is an issue for Mongolia


1 Macquarie Group

overview

Macquarie Group Overview

Macquarie is a diversified financial group providing clients with asset management and finance, banking, advisory and risk and capital solutions across debt, equity and commodities

Founded in 1969 as the Australian subsidiary of UK merchant bank Hill Samuel Australian banking licence obtained and first retail branch opened as Macquarie

Bank in Sydney in 1985 Listed on Australian Securities Exchange (ASX:MQG) since 1996 Operating groups: Macquarie Asset Management (MAM), Corporate and Asset

Finance (CAF), Banking and Financial Services (BFS), Commodities and Global Markets (CGM) and Macquarie Capital (MacCap)

Macquarie Group by the numbers1 Macquarie Group overview

1. Market capitalisation, AUM and staff numbers as of 31 March 2017. 2. Goldman Sachs Bank only rated by Standard & Poor‘s from 2012.

Macquarie has a long history of financial success Macquarie has maintained its S&P rating for 26 years2

$A2,217m

48 years of profitability

M&A

2007 2017

1

2

3

4

5

6

7

Macquarie Bank

JPMorgan Chase Bank

Barclays Bank

Credit Suisse AG

Deutsche Bank

UBS AG Bank of America

Citibank Morgan Stanley Bank

Goldman Sachs Bank

S&

P C

red

it R

atin

g

BBB+

A -

A

A+

AA -

AA

AA+

$A30b+ market capitalisation

$A481.7b in total AUM

13,500+ staff in 27 countries

$A2,217m NPAT in

FY17

15.2% ROE in FY17

Annuity-style businesses

represent ~70% of

the operating groups‘ performance

Macquarie Group Business resilience

-

500

1 000

1 500

2 000

2 500

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

MBL listed

BT Australia acquired

Sydney Airport

ING Acquired

Asian Financial

Crisis

Russian Debt Crisis

Dot Com crash

9/11 US Recession

SARS

Thames Water Giuliani Capital GFC

Constellation Tristone

Delaware FPK Blackmont Sal Opp.

ILFC GMAC Presidio Innovest REGAL

Onstream

Orion Securities CIT Systems Leasing

Group Restructure Significant Market Disruption

European rail leasing

GE Capital‘s Premium Funding business

AWAS aircraft operating lease portfolio Esanda

portfolio

$A

m

-

20

40

60

80

100

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

Savings and loan crisis

US banks capital losses Global debt crisis

US recession $A floated MBL

established

First listed property trust Enter stockbroking

Stock market crash London office

opens

Hills Motorway Mortgage securitisation

Global real estate crash Recession $

Am

-

0,4

0,8

1,2

1,6

2,0

1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

Hill Samuel UK opens branch office

in Sydney Currency

Crisis Recession

$A

m

$A5.5b

Macquarie Group Financial position

1. Macquarie Group Limited‘s funded balance sheet. 2. Calculated at 8.5% RWA including capital conservation buffer (CCB), as per APRA ADI Prudential Standard 110.

Funded Balance Sheet1

31 March 2017

Surplus Capital2

31 March 2017

Credit Ratings

31 March 2017

‘A’ RATED

26 years 20 years 25 years

-

20

40

60

80

100

120

Funding sources Funded assets

$Ab

ST wholesale issued paper (5%)

Other debt maturing in the

next 12 months (9%)

Customer deposits

(40%)

Debt maturing beyond

12 months (33%)

Equity and hybrids

(13%) Equity investments and PPE (6%)

Loan assets

(incl. op lease)

> 1 year (33%)

Loan assets (incl. op lease)

< 1 year (11%)

Trading assets

(18%)

Cash, liquids and

self securitised

assets (32%)

Macquarie Group Our operating groups

1. As at 31 Mar 17. 2. Formerly Macquarie Securities Group and Commodities and Financial Markets.

Annuity-

style

businesses

Macquarie Asset Management (MAM) Top 50 global asset manager with $A480.0b1 of assets under management Provides clients with access to a diverse range of capabilities and products, including infrastructure and real asset management, securities

investment management and tailored investment solutions over funds and listed equities

Corporate and Asset Finance (CAF) Global provider of specialist finance and asset management solutions, with a $A36.5b1 asset and loan portfolio Global capability in corporate and real estate credit investing and lending Expertise in asset finance including aircraft, motor vehicles, technology, healthcare, manufacturing, industrial, energy, rail and mining equipment

Banking and Financial Services (BFS) Macquarie‘s retail banking and financial services business with a $A35.8b1 Australian loan portfolio, funds on platform of $A72.2b1 and BFS

deposits of $A44.5b1 Provides a diverse range of personal banking, wealth management and business banking products and services to retail clients, advisers,

brokers and business clients

Capital markets facing

businesses

Commodities and Global Markets2 (CGM) Integrated, end-to-end offering across global markets including equities, fixed income, foreign exchange and commodities Provides clients with risk and capital solutions across physical and financial markets Diverse platform covering more than 25 market segments, with more than 160 products Growing presence in commodities (natural gas, LNG, NGLs, power, oil, coal, base metals, iron ore, sugar and freight) Global institutional securities house with strong Asia-Pacific foundations covering sales, research, ECM, execution and derivatives and trading

activities

Macquarie Capital (MacCap) Global capability in M&A Advisory, Debt and Equity Capital Markets and Principal Investments Focus on six core sectors: Infrastructure, Utilities and Renewables; Real Estate; Telecommunications, Media, Entertainment & Technology;

Resources; Industrials; and Financial Institutions

Macquarie Group Infrastructure specialist

World‘s leading infrastructure asset manager and advisor

1. As at 31 March 2017. 2. In the year ended 31 March 2017. 3. Based on MSCI Infrastructure Index sector classifications as at 26 June 2017. 4. Willis Tower Watson Global Alternatives Survey 2010 - 2016, measured by assets

under management. 5. Institutional Investor‘s 2016 European Money Management Awards. 6. InfraDeals FY17, by deal value.. 7. Willis Tower Watson Global Alternatives Survey 2010 - 2016. 8. Private Debt Investor Awards

2014 - 2016. 9. Rankings based on methodology created by Infrastructure Investor, and represents infrastructure direct-investment capital formed based on a rolling 5 year period to measurement date.

$US

118b AUM invested in 135 businesses with realised returns of ~17% p.a.1

Over

20 Years managing

infrastructure equity

$US

6b Investor

commitments in

infrastructure debt

Advised on

83 Infrastructure

transactions valued at

over $US56b2

232 Infrastructure stocks under

research coverage with combined

market cap of $US3.5tr3

Award winning platform

Infrastructure

Manager of the

Year Award5

2016

World‘s Largest

Infrastructure

Asset Manager4

2010, 2011,

2013 - 2016

Largest manager

of pension fund assets

in Alternatives7

2010 - 2016

Infrastructure debt

fund manager of the

Year, Europe8

2014 - 2016

Largest infrastructure

direct-investment

programme9

2010 - 2016

No.1 Infrastructure /

Project Finance

Advisory in UK6

2017

135 portfolio businesses, ~300 properties and ~4.5 million hectares of farmland1

Macquarie Group Global presence

1. As at 31 March 2017. Represents portfolio businesses which Macquarie Infrastructure and Real Assets manages on behalf of investors with various direct percentage stakes held in each. Portfolio businesses shown on

the map are representative and not exhaustive. In some instances they represent the operations of a single business where it has operations across different countries

Roads and Rail Renewable Energy Other Transport Services Real Estate Communications Airports Other Real Assets Energy Utilities Waste Agriculture

Russia ■ Brunswick Rail ■ GSR Energy Investments ■ OGK-5 ■ Russian Towers

Philippines ■ GNPower Kauswagan ■ LRT 1 Metro ■ Negros Island Solar Power ■ NLREC Wind Farm ■ Philippine Coastal Storage & Pipeline ■ San Carlos Solar Energy

Australia ■ Axicom Group ■ GWA ■ Hobart International Airport ■ Lawson Grains (10 farms) ■ MREEFs ■ Paraway Pastoral (23 farms) ■ Prospect Water

New Zealand ■ Oceania Healthcare

South Korea ■ AJ Parking Tower ■ Baekyang Tunnel ■ Busan New Port Phase 2-3 ■ Cheonan-Nonsan Expressway ■ CNE Motorway Service Stations ■ Daegil Industry / Daegil Environment ■ Daejon Cogeneration ■ DB Hotel ■ Deok Pyeong Land Company LLC ■ D‘LIVE ■ Goyang Bus Terminal ■ Gwangju 2nd Beltway Section 1 ■ Gwangju 2nd Beltway Section 3-1 ■ Hangdarm Island ■ Hanjin Pacific Corporation ■ Incheon Grand Bridge ■ Incheon International Airport

Expressway ■ Jinju ■ Machang Bridge ■ Moda ■ North East Chemical ■ Pyeong Chang Motorway Service

Station ■ Saehan Environment Co. ■ Seoul Chuncheon Expressway ■ Soojungsan Tunnel ■ United Terminal Korea Limited ■ Woomyunsan Tunnel ■ Yeongyang Wind Power ■ Yongin-Seoul Expressway ■ Youngduk Wind Power

Japan ■ Central Tank Terminal ■ Hanjin Pacific Corporation

Taiwan ■ Hanjin Pacific Corporation ■ Taiwan Broadband Communications

Singapore ■ Universal Terminal

China ■ Dallan Hengji Xinrun Water ■ Hengyang Holdings ■ Jinko Solar Power Engineering ■ Longtan Tianyu Terminal ■ Mosaic Xi‘an ■ Mosaic Beijing ■ Mosaic Qingdao ■ Mosaic Shanghai ■ Mosaic Chongqing ■ Shenyang Water Treatment Co. ■ Shenyang Zhenxing

Environmental Protection ■ Star King ■ Tianjin Port Huisheng Terminal ■ Zhenxing Wastewater

United Kingdom ■ AGS Airports ■ Arqiva ■ Cadent ■ Calon Energy ■ Condor Group ■ M6 Toll ■ National Car Parks ■ Race Bank ■ Thames Water

India ■ Adhunik Power and Natural

Resources ■ Ashoka Concessions ■ GMR Airports ■ GMR Jadcherla Expressways ■ Gujarat Roads & Infrastructure

Corp ■ Ind-Barath Energy ■ MB Power ■ Soham Renewable Energy ■ Swarna Tollways Private Limited ■ Trichy Tollways ■ Viom Networks

Italy ■ Hydro Dolomiti ■ Renvico ■ Societa‘ Gasdotti Italia S.p.A.

Spain ■ Viesgo

Sweden ■ Arlanda Express

Belgium ■ Brussels Airport

Germany ■ Open Grid Europe ■ TanQuid ■ Techem ■ Warnow Tunnel

France ■ APRR ■ Pisto SAS

Poland ■ DCT Gdansk ■ TanQuid

Denmark ■ Copenhagen Airports

Slovakia ■ EP Infrastructure ■ Vector Parks ■ Towercom

Austria ■ Energie Steiermark

Portugal ■ Viesgo

Czech Republic ■ Vector Parks ■ Ceske Radiokomunikace ■ Czech Gas Networks

United States ■ Atlantic Aviation ■ Aquarion Company ■ Bayonne Energy Center ■ Broadrock Renewables ■ Cleco Corporation ■ Dulles Greenway ■ Elizabeth River Tunnels ■ Goethals Bridge ■ Harley Marine Services ■ InSite ■ International-Matex Tank Terminals ■ Leaf River Gas Storage ■ Lordstown Energy Center ■ Maher Terminals ■ MIC Renewable Energy Holdings ■ MIC Hawaii ■ NYK Ports ■ Penn Terminals ■ Puget Energy ■ Red Hills Solar ■ Waste Industries ■ WCA Waste

Canada ■ Autoroute 25 ■ Fraser Surrey Docks ■ GFL Environmental ■ Halterm Limited

Brazil ■ Cruzeiro do Sul Grãos (3 farms)

Mexico ■ Concesionaria Universidad Politécnica ■ Decarred ■ FIBRA Macquarie México ■ Mareña Renovables ■ Mexican Tower Partners ■ Parque Solar Coahuila ■ San Rafael HydroGen


2 Macquarie‘s presence

and experience in Asia

Macquarie Group Asia Our platform

An established presence in Asia since 1995

All data as at 31 Mar 2017. 1. Macquarie is licensed to more than one exchange in 5 markets.

Seoul

Jakarta

Tokyo

Beijing

Taipei Hong Kong

Kuala Lumpur Singapore

Shanghai

Bangkok Manila

Mumbai

Gurugram

13 locations across

11 markets

$A1,238m

FY17 operating income

3,450 employees

~50% global shared services

15 regional stock exchanges

membership licences1

$A49b

assets under management

Cross border flows

between ANZ, EMEA, US

Strategic alliances

with leading institutions

Macquarie Asset

Management

MIRA manages $A17b across 61 infrastructure and

real estate assets across 7 countries

MIM has 5 investment teams

managing $A28b across

Asian equities, fixed income

and hedge fund strategies

Raised $A10.3b Asian

capital in the last 12 months

Macquarie Asia

Infrastructure Fund

Largest Asia-focused fund

in the market1

Corporate and

Asset Finance

Asset Finance and

Lending business: Aircraft,

Technology and

Manufacturing

Pan-Asia customer base

Funded $A200m+ leases

across Asia in the last 12

months

Semiconductor leasing

and trading expertise


Macquarie Group Asia Key operating groups

As at 31 Mar 2017. 1. Preqin.

Commodities and

Global Markets

Risk and Capital solutions

across financial and

physical markets

Integrated end-to-end offering across energy;

metals; mining and agriculture; fixed income and currencies; futures

Equities execution across 15 exchanges and 960+ stocks under coverage

ECM transactions raised

$A10.3b for clients in the

last 12 months

Macquarie Capital

Focused on infrastructure,

real estate, principal and

Greater China cross

border M&A

Growing development capital pipeline in renewable energy

Advised on 2 of first 3

infrastructure privatisation

deals in Japan

Raised $A1.6b of

private capital from

Asian investors

Capital markets facing businesses

Macquarie Group Asia Macquarie Capital - Projects

Project specialists based in Asia and the Middle East dedicated to assisting clients with their needs

Combining knowledge

and skills to anticipate

and mitigate risk in the

complete matrix of project

and investment dynamics

is neither natural nor widely

available within engineering

and construction advisers.

Macquarie‘s corporate

financing and investment

background is unique

amongst advisers.

Macquarie Projects provides commercial project development advice to Clients regardless of funding arrangements

As one of the world‘s largest owner / operators of infrastructure assets, Macquarie has developed a centre of excellence within Project structuring

and implementation. Drawing on this experience as an owner allows Macquarie Projects to understand what it means to be responsible for the

success or failure of a Project and what commercial arrangements are necessary to meet Client‘s requirements

The commercial expertise that Macquarie Projects applies to projects differentiates it from the rest of the market

Hong Kong

Singapore Indonesia

Philippines Thailand

China United Arab

Emirates Saudi

Arabia

Japan

South

Korea

Who Macquarie Projects can assist

Macquarie Capital – Projects Service Offerings

Asset Management Delivery Documentation & Procurement Feasibility

Technology reviews and

assessments

Reconnaissance on existing

facilities or greenfield sites

Advice from industry experts with

deep sector understanding

Reviewing and commenting on

findings / deliverables from Client‘s

consultants and advisors

Selecting the right procurement

model & managing tender process

Structuring achievable commercial

arrangements in project documents

Making Client aware of their

obligations and deliverables under

the Project documents

Identifying and mitigating interface

risks.

On time and on budget delivery

Owner‘s Representation on Site to

manage Contractors and

Engineering teams, Independent

certifiers / Authorities, etc

Quality, health, safety and

environment (QHSE) oversight

Reporting to Owner‘s for efficient

and effective decisions

Board, Investment Committee

representation

Procurement of advisors

Accounts management

Secretarial function, preparation of

Board papers, taking minutes, etc.

Preparation of valuations and

dividend distribution

Project owners

(Government / State Owned

Enterprises)

Developers

(Public and private)

Financiers

(Debt and equity providers) Other stakeholders

Infrastructure Social / Renewables

Water Healthcare Solar / Wind Waste to Energy Wastewater Rail Road Air Schools Food waste

http://www.google.com.sg/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwirtrLNv_bLAhXCu4MKHZ9CDSAQjRwIBw&url=http://cliparts.co/construction-clip-art-free&bvm=bv.118443451,d.amc&psig=AFQjCNG0tUBBCkxUh7ZshuxRa4vNxGfIxQ&ust=1459911277470925

Macquarie Capital – Projects Our team

Macquarie Projects currently has 80 people across Asia and the Middle East

HONG KONG

KOREA (47)

UAE (2)

INDONESIA (7)

TAIWAN (5)

SINGAPORE (4)

JAPAN (15)

Commercial

11 Industry Experts

30 Technical/Operations

30

Support Staff

9

80 MacPro

SRF Waste to Energy

Bio-SRF Waste to Energy

Waste Sourcing (Korean market)

Offshore wind development

Onshore wind development

Rooftop Solar

Ground mounted Solar

Project Managers

Construction Managers

Waste to Energy Plant Manager

Food waste technology

Food waste Facility operations

District Cooling technology

District Cooling Facility operations

Industrial Land Development

Wastewater treatment facilities

Wastewater treatment operations

Road and bridge development

Street Lighting

Rail operations

Light rail development

Airport development

Airport operations

Water network development

Water storage facilities

Master Planning

Landscaping

Irrigation systems

Specialist expertise

2017

Cargill

Petroleum

acquisition –

integration

of Asian

business

First India

road asset

fund exit

Macquarie Group Asia Evolution

Thailand

warrants

QFII

2012

Tokyo (1999) and

Seoul (2000)

offices opened

1999, 2000

First China real

estate investment

Leasing in Korea

1999

Korean

warrants

2007

Listed Asian

equities strategy

2009

Adviser for ABC‘s HK IPO1

FX, fixed income and commodities

on-the-ground presence in Singapore

2010

Discretionary

Investment

Management

(DIM) license

in Japan

BFS exit

Equities

Structured

Products exit

2014

Islamic

Markets

business

2015


Capital markets facing businesses

First China

and India

infrastructure

funds

2010

First regional

infrastructure

fund

2015

First China

retail property

fund

MKIF listing

Asian quant

hedge fund

2006

Philippine

infrastructure fund

Korea Private

Concession Fund

MIM Asian

Distribution

restructured

2012

ING Asset

Management

Korea

acquired

2013

Manila and Gurugram

Shared Service Centres

opened

First WFOE2

in China

Oil tanking

investment

Malaysia

warrants

2014 2016

1995

Hong Kong

and Beijing

offices

opened

2008

2016

MIM

Singapore

office opened

Macquarie

Global Alpha

Fund

First China

retail property

fund exit

First Korean

infrastructure

fund

2000

Development Capital

Sale of China Trust

Company JV

ING Asian cash equities

business acquired –

Taiwan, Malaysia,

Indonesia, Philippines

and Thailand offices

opened

2004

1. Hong Kong IPO of the Agricultural Bank of China ($US22.1b), at the time the world‘s largest IPO. 2. Wholly-Foreign Owned Enterprise.

China Trust

Company JV

2009

2017

Macquarie Korea

1. As at 31 March 2017. 2. Includes permanent and temporary staff.

Providing essential services to the

Korean economy

220 million road users / year

1.6 million TEU / year

2.4 million cable TV subscribers

346.8 GwH power / year

336,817 Gcal heat / year

2.14 million tons of steam delivered / year

2.56 million tons of waste treated / year

540 tons food waste treated / day

600 tons of combustible recycling capacity / day

Leveraging its global network and local expertise, Macquarie Group has contributed to the Korean

economy by partnering with local clients, stakeholders and the community for 17 years

Key businesses

220+ Staff employed across 4 key businesses

36 Assets invested in infrastructure, renewables and waste

Largest Foreign asset manager

Macquarie Asset

Management

$US31b under management across equities, fixed

income, alternatives and infrastructure

Macquarie Capital Principal investment and advisory specialising in the

environmental and energy sectors

Corporate and Asset

Finance

Semi-conductor and IT equipment leasing

Commodities and Global

Markets

Integrated end-to-end offering: equities, fixed income,

foreign exchange and commodities

3,794 Staff employed at invested assets2

Macquarie Korea Platform evolution

Pre 2000

IMM

Kookmin

alliance

JV with

Shinhan

Infrastructure Fund

capitalized with

KRW 247 billion

2002

2003

Woori Macquarie

Equities Derivatives

Co-operation

2004

First listed REIT

on Korea

Exchange

Macquarie

Securities

Ltd. Seoul

Branch

Macquarie Korea

Opportunities Fund

established

2005

Infrastructure Fund

lists on Seoul and

London stock

exchanges

2006

Woori Macquarie Business co-

operation begins trade in

commodity derivatives

MSKL converted from

branch to locally

incorporated

subsidiary

2007-8

Macquarie IMM

sold to Goldman

Sachs

MSKL OTC license

received March 2007

Top Advisor in Korea

on 2008 M&A

Financial Advisory

Thomson League

Table

2009

Macquarie Samchully

Asset Management

Attempt to acquire

Prudential Securities

Korea

Bank branch commences

operation Q1 and receives

OTC derivatives license in

Q4

2010

Korea Macquarie

Growth Fund

(KMGF) established

2011

2012

Macquarie purchased 50%

common shares in MSIAM,

renamed the entity as ‗Macquarie

Korea Asset Management‘ ending

Shinhan JVs

CAF / KDB JV

MIRA - New commercial

concessions fund

KIC mandate on emerging market

equities

Acquire Merrill Lynch‘s mortgages

Acquisition of ING Investment Management

Korea

Attempt to buy Woori Bank NPL business

2013

New unlisted

domestic fund

MREK sale to ARA

2014

2015

MIRA: MKOF3 established

(KRW 605b/$AU 700m) and

deployed KRW 122b ($AU

141m); KPCF3 established

(KRW 520b/$AU 601m),

MacCap – Waste Sector

Company

MacCap: Acquired

ReClean and

established waste

management related

entities

2016

Seoul office

Tech. Equip

Leasing

Kookmin JV

MIMM FM JV

2000-1

Case study: MKIF Evolution

Only listed infrastructure fund in Korea / Largest portfolio of toll roads in Asia

Pioneered best practice infrastructure fund management in Korea, serving as an education platform for local financial institutions

MKIF history

1. As at 31 March 2017. 2. MKIF delisted from LSE in March 2016

2002

MKIF

established

2003-5

Capital raising

and investing

2006

IPO

listing

2007 onwards

Active asset and

capital management

2015

Mandate expansion

Present

Market leader

Manager:

Macquarie - Shinhan JV

(Oct 2002)

Manager:

Macquarie buy-out

(June 2012)

1st raising of $A290m

19 investors (17 domestic)

Investment in

15 toll road & 1

subway line

(8 brownfield &

8 greenfield)

8 greenfield completion

1 investment / 4 divestments

5 fund refinancing and bond

offering

11 asset capital restructuring

5 court dispute resolutions

IPO ($A1.2bn)

32% of IRR to pre-

IPO investors

Dual listing on

KRX and LSE2

Restriction on public concession (BTO)

alleviated

Capacity to transition from time restricted

concession to a diversified infrastructure

conglomerate

More scope to buy& sell

Potential for fund to be priced for intrinsic

value rather than short term yield

Establishment/Listing

2002 / 2006 Mandate

Core / Core+ (Korean only)

Portfolio

11 toll roads / 1 port (all concessions)

Market capitalisation

$A3.1bn1 (KRX top 80)

AUM $A1.85b (30 Jun 17)

Korea asset portfolio 40 assets across infrastructure, energy, waste and others

Current assets as of 31 March 2017. 1. Includes MIRA and MacCap assets

Roads / Tunnel

Incheon International Expressway

Incheon Grand Bridge

Yongin Seoul Expressway

Gwangju 2nd Beltway,Section 1

Gwangju 2nd Beltway,Section 3-1

Seoul–Chuncheon Expressway

Woomyunsan Tunnel

Cheonan– Nonsan Expressway

Baekyang Tunnel

Soojungsan Tunnel

Machang Bridge

Waste

Daegil Industry / Daegil Environment

Jinju Industry

M-Icheon

M-Prum / Re-Clean

M-Daon

M-Haman

Saehan Environmental

Power / Utilities

North East Chemicals

Daejeon Combined Heat and Power Plant

Private Concession

CNE Motorway Service Station (MSS)

Haengdam MSS

Goyang Terminal

Dongja Business Hotel

PyeongChang MSS

Dukpyeong MSS

MODA Outlet Daegu

AJ Parking

Media

D‘Live

Renewable Energy

Youngduk Wind Power

Yeongyang Wind Power

Port

Hanjin Terminals

(US, Japan, Taiwan)

Busan New Port Phase 2-3

Venture

Yello Mobile

Storage

United Terminal Korea

1

https://www.google.co.kr/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwixpNPa3prMAhUnG6YKHRnYAm8QjRwIBw&url=https://commons.wikimedia.org/wiki/File:Map_of_South_Korea-blank.svg&psig=AFQjCNGYAOu_rTUiW-KMs2O24HUGGMBJkA&ust=1461156589821886


3 Asia outlook

and opportunities

Positive macro outlook

45% 48%

51%

-

1b

2b

3b

2010 2015 2020F

Population % of total population

27%

35%

45%

-

1b

2b

2010 2015 2020F

Population % of global middle class population

GDP3 ($UStr)

26% 30%

33%

-

10

20

30

40

2010 2015 2020F

GDP % of global GDP

Total savings4 ($UStr)

29%

34%

40%

-

5

10

2010 2015 2020F

Savings % of global savings

1. United Nations Department of Economic and Social Affairs. 2. Brookings Institute (Middle class defined as $US10-$US100 earnings per person per day). 3. IMF WEO Database as at 12 Apr 17.

4. World Bank, ‗Capital for the Future‘.

Urban population1 Middle class population2

Growing capital pools

Chinese insurers’ asset allocation3 Asia’s capital market and M&A activity1 Assets under management (AUM)2

1. Deal value per Dealogic as at 31 Dec 16; monthly stock market turnover per World Federation of Exchanges as at 31 Dec 16. 2. Asset management industry AUM estimates per PwC, ‗Asset Management 2020 – A Brave New World‘. 3. China Insurance Regulatory Commission as at

30 Jun 16.

-

300

600

900

1,200

2012 2013 2014 2015 2016

ECMM&A

-

2

4

6

8

Stock market turnover (RHS)

Stock market turnover (ex A-share, RHS)

($UStr)($USb) ($UStr)

CAGR

+9.3%

+4.5%33.2

41.3

7.7

12.0

-

15

30

45

60

2012 2016

Asia North America

CAGR

+56.5%

+18.0%

+7.4%

+0.6%

+15.0%$US1.0tr $US1.8tr

Cash

Fixed Income

Equity

-

25%

50%

75%

100%

2012 2016

Alternatives

Supported by strong policy and reform agendas

Significant opportunity across key markets

China

Moving to the

Market

Urbanisation

Major

infrastructure

needs

Rising middle class

Cross-border

investment

Financial market

liberalisation

Japan

Abenomics

Large institutional

investors

Renewable energy

policies

Cross-border

investment by

trading companies

South Korea

Moon Economy

Large institutional

investors

Renewable energy

policies

Few limitations on

foreign investment

Large corporates

High tech sector

India

The Modi

Project

Urbanisation

Major

infrastructure

needs

Rising middle class

Improving

transparency

Taiwan

Reviving

Economy

Renewable energy

DIGI+ Plan and the

high tech sector

Large institutional

investors

Developing and

repatriating talent

from abroad

Trade agreements:

TPP, NSP & FTAs

Philippines

Catch-Up

Economy

Growing young

population

National savings

institutions

Strong government

push for

infrastructure

development

Large

conglomerates

expanding into

infrastructure

Asia‘s required infrastructure funding requirement is significant and currently not matched by

available sources of capital

Asia‘s Infrastructure funding gap

Asia Infrastructure Projected Demand for

Capacity and Replacement (2016-2030)

7.0 Transport

0.7 Water/Sanitation 2.0 Telecommunications

1.5 Renewables

9.0 Electricity

$20.2 trillion1

$13 trillion from China alone

$4 trillion from India

$3 trillion from Southeast Asia

Resulting to an infrastructure funding gap of

$3-4 trillion

Augmented by robust brownfield opportunities, as a result of

Non-core asset sales and capital

recycling for new infrastructure

Of the $20.2 trillion projected demand…

1. Calculated from Macquarie‘s analysis of Asian Development Bank‘s ‗Meeting Asia‘s Infrastructure Needs‘ report dated Feb 2017.

Source: International Energy Agency - World Energy Outlook 2016

Electricity access in Asia

Power and energy

512m people have no access to

electricity

Power generation is expected to nearly double from 10,850TWh in 2016 to 20,119TWh in 2040

48% growth by 2035

Growth in energy consumption

2X increase in power

generation

Growth in energy production

Power generation will be a key focus in the region driven by urbanisation and industrialisation

56% of global energy

production by 2040

Share of global energy production

74% of regional total.

Will build 3,243GW by 2040

China and India to be leaders in power generation

and consumptions

Regulatory support

Changes to renewable energy policies across the region have been creating new

opportunities in the sector

Renewable energy mix targets 20%

by 2025 24%

by 2030 20%

by 2030

DOUBLED from 10%

Scaling back on coal and nuclear power

shutting down coal firing plants (total

3.3GW) and nuclear reactor

4th Industrial Revolution is key agenda,

with renewable energy a critical part -

pledging 50,000 new jobs in sector

President Tsai is proactive in renewable

energy sector significantly increasing

installation targets by >50% by 2025

―Million Solar Rooftop PV‘s‖ and

―Thousand Wind Turbines‖ projects:

— Solar PV: 3,100MW by 2030

— Wind: 4,200MW by 2030

Government implemented a new feed in

tariff to support the development of

renewable energy post Fukushima

Solar is the top renewable energy source

in the country. If the 2030 target is met,

Japan‘s installed capacity will hit 64GW

Acquisition of Green Investment Bank The combined business

The combination of the Green Investment Bank and Macquarie will create a clear market

leader in green infrastructure investment

Targeting $US3.8 billion of investment over three years

A clear market leader

A combined principal investment platform

for European green infrastructure

£4 billion of green projects under

management for investors including USS,

the UK Government and Macquarie's

MEIF5

Offices in Edinburgh and London

Committed to Green Investment Bank‘s

green purpose and approach to green

investment

Committed to investing in the low carbon

economy, across all technologies

Note: USD1=GBP0.79


4 Mongolia: Future prospects

and opportunities for the

financial sector

Mongolia Macroeconomic overview

1. Asia Development Bank as at 16 Aug 17. 2. Bank of Mongolia, policy rate effective 15 Jun 17. 3. MSE Top 20 Index, Bloomberg as at 16 Aug 17. 4. UNCTAD, World Investment Report, 2017. Decline mainly due to negative

intracompany loans, changes in commodity prices and regulatory/legal uncertainty for FDI projects. 5. Looser fiscal policy was a major driver (along with commodity price declines) for Mongolia‘s high debt 6. With China and South

Korea

Mongolia economic indicators

Total GDP (2016) / GDP growth (2017F)1 $US11.2b / 2.5%

Sovereign rating / Long term outlook (S&P) B- / stable

Key benchmark rate2 12.0%

Stock market YTD performance3 14,640 (+18.5%)

FDI net inflows (2016)4 -$US4b (-433% yoy)

3.1m Population

~80% Of all exports

to China

~90% Of GDP is

from mining

Economic and political developments

Financial aid from IMF, IFC (World Bank) and various

international agencies to support economic recovery

Financial and structural reforms: fiscal consolidation5,

monetary tightening, governance and tariff/tax policies

Industry diversification: technology and renewables

Poverty reduction and reallocating social welfare

Trade

‗Mongolia First‘ economic independence initiative

Proposed Free Trade Agreements6

Expanding trade relations with India, Russia and Japan

Infrastructure

Modernising energy and wastewater infrastructure

Developing new transport and industrial infrastructure

to facilitate trade, mining and Belt and Road Initiative(s)

Current

themes

Mongolia Key policy initiatives

Economic diversification1 and trade agreements to offer significant import and export opportunities

New legislation2 and councils3 to enhance FDI, entrepreneurship and business confidence

Trade and investment stimulated through accommodative monetary policy and flexible exchange rates

Developing/partnering with educational institutions to bridge skill gaps

Government initiatives to promote renewable energy development and infrastructure (transportation and social)

Privatisation of state-assets4 including PPP development of infrastructure

1. Agriculture, livestock (meat and cashmere), renewable energy (solar and wind) and tourism sectors. 2. Aimed at anti-corruption, promoting Small Medium Enterprises (SME) and governance and transparency. 3. Newly

established National Development Agency and Investor Dispute Resolution Council. 4. Although announced in Parliament‘s 2016 National Action Plan, no specific assets have been nominated for sale yet.

Mongolia Financial sector

Potential Opportunities

Banking system reforms1 to improve the regulatory

framework and resilience of commercial banks

Proposed establishment of an asset management company2

to hold NPLs3 from domestic banks to free up capital

Establishment of a tax administration to strengthen tax

policy and budgetary controls

EBRD4 approved its 4-year investment plan into Mongolia

Recent developments

Consolidation of Mongolia‘s banking sector – M&A

Advisory for banks – balance sheet recapitalisation

JVs between domestic banks with foreign niche FI5

JVs between Mongolian corporates with FI (domestic and

foreign) for infrastructure development

Financing for priority industries such as resources and

infrastructure (with government support) as well as SMEs

Infrastructure project preparation and management

Development of new financial products: asset-backed

lending, securitisations and high yield investments2

Commodities and FX hedging6

Development of a National Savings regime

1. Including Asset Quality Review, Deposit Insurance Scheme and AML/CTF policies mainly as a result of the IMF $US5.5b aid program. 2. 12 Jun 17, Mongolia moots asset management company to tackle bad loans, FT.

3. Non Performing Loans. 4. European Bank for Reconstruction and Development. 5. Financial institutions. 6. For the mining and agricultural sectors

Super-grid project connecting Northeast Asia1

Smart Energy Belt of One Asia

1. Mongolia, Korea, China, Japan and Russia. 2. Korean Electric Power Co

Project highlights

Constructing solar and wind energy farms in Mongolia to

deliver power for neighbouring countries

Aims to reduce pollution, emissions, energy prices and

establish a joint economic community in the region

Partnership discussions held between KEPCO2 and

Softbank on new energy, big data and technology

MOU signed between KEPCO and State Grid Corp (China)

and Rossetti (Russia)

Spearheaded by Korean and Japan with full support from

President Moon in Korea

Proposed energy belt: Mongolia to benefit from energy infrastructure and power

Infrastructure investment is more than just building things

A private infrastructure industry

Strong link between growing capital markets and

infrastructure development – one gigawatt of wind

translates into $2b of investment

Attracts foreign debt and equity capital, opening up

opportunities for domestic savings

Job creation across industries not just the financial sector

Facilitates diversification of banks

Infrastructure Development

Government policies

and regulation EPC O & M

Advisers

Predictable investment

products for customers IPOs (New)

• Domestic listings

• Dual listings

Banks

Equity Debt

Investment

Institutions

Domestic Foreign

Wind Energy‘s Economic ―Ripple Effect‖

Project Development & On-Site

Labour Impact

Construction Phase:

Over 600 FTE jobs

$55million to local economies

Operational Phase:

60 long-term jobs

$4 million/year to Texas

$5 million/year in land owner revenue

$7 million/year in property taxes

Local Revenue, Turbine,

& Supply Chain Impact

Construction Phase:

Over 1,000 FTE jobs

$140 million to local

economies

Operational Phase:

100 jobs Over $21 million/year to

local economies

Induced Impact

Construction Phase:

Over 500 FTE jobs Over $65 million to

local economies

Operational Phase:

80 jobs Near $10 million/year

to local economies

From developing 1,000 MW of wind energy in Texas

attracting financial sector participation in...

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