mnca.mnmnca.mn/mon/upload/files/20170824_AustCham_Presentation_Mon… · PAGE 2 The material in this presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (Macquarie)

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 302 Divider title goes here 8


Contents1. Macquarie Group overview 5

2. Macquarie’s presence and experience in Asia 12

3. Asia outlook and opportunities 23

4. Mongolia: Future prospects and opportunitiesfor 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


1Macquarie Group

overview

Macquarie GroupOverviewMacquarie 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 numbers1Macquarie 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$A2,217m48yearsof 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

Cre

dit 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 inFY17

Annuity-style businesses represent ~70% of the operating groups’

performance

Macquarie GroupBusiness 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

MBLlisted

BTAustraliaacquired

SydneyAirport

INGAcquired

Asian Financial

Crisis

Russian DebtCrisis

Dot Comcrash

9/11 USRecession

SARS

Thames WaterGiuliani Capital GFC

ConstellationTristone

DelawareFPKBlackmontSal Opp.

ILFCGMACPresidioInnovestREGAL

Onstream

Orion SecuritiesCIT Systems Leasing

Group RestructureSignificant Market Disruption

European rail leasing

GE Capital’s PremiumFunding business

AWAS aircraft operating lease portfolio Esanda

portfolio

$Am

-

20

40

60

80

100

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

Savings and loan crisisUS banks capital lossesGlobal debt crisis

US recession$A floated MBL

established

First listed property trustEnter stockbroking

Stock market crashLondon office

opens

Hills MotorwayMortgage securitisation

Global real estate crashRecession$A

m

-0.40.81.21.62.0

1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

Hill Samuel UK opens branch office

in Sydney CurrencyCrisisRecession

$Am

$A5.5b

Macquarie GroupFinancial 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 Sheet131 March 2017

Surplus Capital231 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 thenext 12 months (9%)

Customer deposits(40%)

Debt maturing beyond12 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 GroupOur 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 GroupInfrastructure 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

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

Over

20Years managing infrastructure equity

$US

6bInvestor commitments ininfrastructure debt

Advised on

83Infrastructure transactions valued at over $US56b2

232Infrastructure 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 GroupGlobal 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 RailRenewable Energy Other Transport Services Real EstateCommunicationsAirports Other Real AssetsEnergy UtilitiesWaste 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


2Macquarie’s presence

and experience in Asia

Macquarie Group AsiaOur platformAn 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

TaipeiHong Kong

Kuala Lumpur Singapore

Shanghai

Bangkok Manila

Mumbai

Gurugram

13 locations across11

markets

$A1,238mFY17 operating income

3,450 employees~50% global shared services

15 regional stock exchangesmembership licences1

$A49bassets under management

Cross border flowsbetween ANZ, EMEA, US

Strategic allianceswith 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 baseFunded $A200m+ leases across Asia in the last 12

months

Semiconductor leasing and trading expertise

Annuity-style businesses

Macquarie Group AsiaKey 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 incomeand 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 CapitalFocused on infrastructure,real estate, principal and

Greater China cross border M&A

Growing developmentcapital 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 AsiaMacquarie 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

SingaporeIndonesia

PhilippinesThailand

ChinaUnited Arab

EmiratesSaudi Arabia

Japan

South Korea

Who Macquarie Projects can assist

Macquarie Capital – ProjectsService Offerings

Asset ManagementDeliveryDocumentation & ProcurementFeasibility

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 EnergyWastewater 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 – ProjectsOur 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)

Commercial11

Industry Experts30

Technical/Operations30

Support Staff9

80MacPro

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 AsiaEvolution

Thailand warrants

QFII

2012

Tokyo (1999) and Seoul (2000)

offices opened

1999, 2000

First China real estate investmentLeasing 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) licensein JapanBFS exitEquities Structured Products exit

2014

Islamic Markets

business

2015

Annuity-style businesses

Capital markets facing businesses

First China and India infrastructure funds

2010

First regional infrastructure fund

2015

First China retail property fundMKIF listingAsian quant hedge fund

2006

Philippine infrastructure fundKorea Private Concession FundMIM Asian Distribution restructured

2012

ING Asset Management Korea acquired

2013

Manila and GurugramShared Service Centres opened

First WFOE2in China

Oil tanking investment

Malaysia warrants

2014 2016

1995Hong Kong and Beijing offices opened

2008

2016MIM Singapore office openedMacquarie Global Alpha FundFirst China retail property fund exit

First Korean infrastructure fund

2000

Development CapitalSale 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

36Assets invested in infrastructure, renewables and waste

LargestForeign 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

3,794Staff employed at invested assets2

Macquarie KoreaPlatform evolution

Pre 2000IMMKookminalliance

JV with Shinhan

Infrastructure Fund capitalized with KRW 247 billion

2002

2003Woori Macquarie Equities Derivatives Co-operation

2004First 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

2006Woori Macquarie Business co-operation begins trade in commodity derivatives

MSKL converted from branch to locally incorporated subsidiary

2007-8Macquarie IMM sold to Goldman Sachs

MSKL OTC license received March 2007

Top Advisor in Korea on 2008 M&A Financial Advisory Thomson League Table

2009Macquarie SamchullyAsset 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

2012Macquarie purchased 50% common shares in MSIAM, renamed the entity as ‘Macquarie Korea Asset Management’ ending Shinhan JVsCAF / KDB JVMIRA - New commercial concessions fundKIC mandate on emerging market equitiesAcquire Merrill Lynch’s mortgages

Acquisition of ING Investment Management KoreaAttempt to buy Woori Bank NPL business

2013

New unlisted domestic fundMREK sale to ARA

2014

2015MIRA: 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 officeTech. Equip LeasingKookmin JVMIMM FM JV

2000-1

Case study: MKIFEvolutionOnly 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

2002MKIF established

2003-5Capital raising and investing

2006IPO listing

2007 onwardsActive asset and capital management

2015

Mandate expansion

PresentMarket 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 / 2006Mandate

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 portfolio40 assets across infrastructure, energy, waste and others

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

Roads / TunnelIncheon International ExpresswayIncheon Grand BridgeYongin Seoul ExpresswayGwangju 2nd Beltway,Section 1Gwangju 2nd Beltway,Section 3-1Seoul–Chuncheon ExpresswayWoomyunsan TunnelCheonan– Nonsan ExpresswayBaekyang TunnelSoojungsan TunnelMachang Bridge

WasteDaegil Industry / Daegil EnvironmentJinju IndustryM-IcheonM-Prum / Re-CleanM-DaonM-HamanSaehan Environmental

Power / UtilitiesNorth East ChemicalsDaejeon Combined Heat and Power Plant

Private ConcessionCNE Motorway Service Station (MSS)Haengdam MSSGoyang TerminalDongja Business HotelPyeongChang MSSDukpyeong MSSMODA Outlet DaeguAJ Parking

MediaD’Live

Renewable EnergyYoungduk Wind PowerYeongyang Wind Power

PortHanjin Terminals(US, Japan, Taiwan)Busan New Port Phase 2-3

VentureYello Mobile

StorageUnited 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


3Asia 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 poolsChinese insurers’ asset allocation3Asia’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 2016ECMM&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 2016Asia 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

ChinaMoving 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


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 thehigh tech sector


Developing and repatriating talent from abroad

Trade agreements: TPP, NSP & FTAs

PhilippinesCatch-Up EconomyGrowing 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/Sanitation2.0 Telecommunications1.5 Renewables

9.0 Electricity

$20.2 trillion1

$13 trillionfrom China alone

$4 trillionfrom India

$3 trillionfrom Southeast Asia

Resulting to an infrastructure funding gap of

$3-4 trillionAugmented 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

512mpeople 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

2Xincrease 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 supportChanges to renewable energy policies across the region have been creating new opportunities in the sector

Renewable energy mix targets 20%by 2025 24%by 203020%by 2030

DOUBLEDfrom 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 BankThe combined businessThe 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


4Mongolia: Future prospects

and opportunities for the financial sector

MongoliaMacroeconomic 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)

3.1mPopulation

~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

MongoliaKey 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.

MongoliaFinancial 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 regime1. 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 KoreaProposed 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 regulationEPC 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 ImpactConstruction 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 ImpactConstruction Phase: Over 1,000 FTE jobs $140 million to local

economies

Operational Phase: 100 jobs Over $21 million/year to

local economies

Induced ImpactConstruction 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 Mongolia Important informationSlide Number 3Key TakeawaysSlide Number 5Macquarie Group�OverviewMacquarie Group�Business resilienceMacquarie Group�Financial positionMacquarie Group�Our operating groupsMacquarie Group�Infrastructure specialistMacquarie Group�Global presenceSlide Number 12Macquarie Group Asia�Our platformMacquarie Group Asia�Key operating groupsMacquarie Group Asia�Macquarie Capital - ProjectsMacquarie Capital – Projects�Service OfferingsMacquarie Capital – Projects�Our teamMacquarie Group Asia�EvolutionMacquarie KoreaMacquarie Korea�Platform evolutionCase study: MKIF�EvolutionKorea asset portfolio�40 assets across infrastructure, energy, waste and othersSlide Number 23Positive macro outlookGrowing capital poolsSignificant opportunity across key markets�Asia’s Infrastructure funding gapPower and energyRegulatory supportAcquisition of Green Investment Bank�The combined businessSlide Number 31Mongolia�Macroeconomic overviewMongolia�Key policy initiativesMongolia�Financial sectorSmart Energy Belt of One AsiaA private infrastructure industryWind Energy’s Economic “Ripple Effect”

Documents

mnca.mnmnca.mn/mon/upload/files/20170824_AustCham_Presentation_Mon… · PAGE 2 The material in this presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (Macquarie)