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Mayors water summit

Title Slide. Mayors water summit. Pension Funds as a Possible Source of Capital for Public Infrastructure. December 8, 2010. Guest Speakers: Craig Beevers & Thad Wilson. DISCLAIMER.

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Mayors water summit

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  1. Title Slide Mayors water summit Pension Funds as a Possible Source of Capital for Public Infrastructure December 8, 2010 Guest Speakers: Craig Beevers & Thad Wilson

  2. DISCLAIMER The services outlined in this presentation are provided by M3 Capital Partners LLC in the United States, M3 Capital Partners Limited in the United Kingdom and M3 Capital Partners (HK) Limited in Hong Kong. This presentation is made on a confidential basis to selected sophisticated institutional investors. It must not be copied or disclosed to anyone except to personnel and professional advisers of the recipient on a confidential need to know basis. It is for information purposes only and is not an offer or invitation to subscribe for or purchase securities or to enter into any agreement for investment services nor a solicitation of an offer to subscribe for or purchase securities or enter into any such agreement. No advice or recommendation is contained in it and it does not take into account the investment objectives, financial situation and particular needs of any potential investor or issuer. All investments are subject to significant risks of loss of income and capital. Past performance of particular investments should not be seen as an indication of future performance, and there is no certainty or guarantee that results comparable to those achieved in the past can be achieved in the future. In the United Kingdom this presentation is intended only for investment professionals and high net worth companies, partnerships, associations or trusts falling within Articles 19 and 49 of the FSMA (Financial Promotion) Order 2005. Firms authorised under the Financial Services and Markets Act (“FSMA”) may also provide this presentation to persons they have classified as Professional Clients under the Financial Services Authority rules. Transmission to any person in the UK other than the categories stated above is unauthorised and may contravene FSMA. No person falling outside those categories should treat this presentation as constituting a promotion to him or rely or act on it for any purposes whatever. This presentation is in Hong Kong only intended for professional investors. The term "professional investor" is as defined in the Securities and Futures Ordinance and its subsidiary legislation. M3 Capital Partners LLC is a member of FINRA and SIPC. M3 Capital Partners Limited is authorized and regulated by the Financial Services Authority. M3 Capital Partners (HK) Limited is licensed with the Securities and Futures Commission.

  3. M3 CAPITAL PARTNERS An Integrated, Global Real Asset Private Equity Investment and Advisory Firm Focus on Real AssetPrivate Equity • Since inception in 1991, M3 has focused on real asset private equity investment and financial advisory services, executing 200+ transactions with a total capitalization over $80 billion • M3 currently manages two private equity funds aggregating $2.9 billion of equity through Evergreen Investment Advisors, a wholly owned subsidiary Global Presence and Expertise • Global platform with regional offices in Chicago, New York, London and Hong Kong1 • The majority of M3 transactions involve cross-border flows of capital • M3 Principals have average real asset experience of 23 years and average M3 tenure of 15 years • Stability of senior management and a focus on long-term strategic relationships Management-Owned with Long-Term Stability 1 Services provided in the United States by M3 Capital Partners LLC, in the United Kingdom by M3 Capital Partners Limited, and in Hong Kong by M3 Capital Partners (HK) Limited.

  4. Bulleted List with Headings Infrastructure overview Why is Private Capital Attracted to Infrastructure Assets? Due to recent market turmoil and the perceived threat of inflation, private capital is attracted to tangible infrastructure assets offering: Low volatility Predictable cash-flow Attractive real returns Low correlation with other asset classes Attractive features of drinking water and wastewater infrastructure investments: Capital intensive Varied sizes ($10$100+ million) Very long investment horizon Stable, secure cash-flows Monopolistic characteristics Massive need for investment

  5. Table of Terms private capital’s appeal Why Should Municipalities be Attracted to Private Capital? 1 Studies cited by Jack Wells, US DOT Chief Economist, have found that each $1 billion in infrastructure investment could generate 34,800 jobs.

  6. Bulleted List with Headings PRIVATE INVESTMENT VEHICLES Variety of Direct & Indirect Sources of Private Capital Direct Investment Secondary Investment • Public Pension Funds • Corporate Pension Funds • Sovereign Wealth Funds • Insurance Companies • Private Equity Funds • Unlisted Funds • Listed Funds • Fund of Funds Listed Corporates Infrastructure Assets

  7. Table of Terms THE DIRECT APPROACH Direct Investment by Public Pension Funds

  8. Process Spectrum of Potential structures Not a “One Size Fits All” Approach Public Ownership DBO Joint Venture DBOF / Concession Private Ownership • Strengths • Long-term ownership • Alignment of interest • Ability to optimize leverage • Challenges • Minority ownership for investor • Untested structure • Rate setting mechanism • Example • Potentially structure similar to Indianapolis transfer agreement • Strengths • Coordination of design, build and operations process • Long-term, stable cash-flow stream • Challenges • Structuring of financial and operational risks • Getting the contract terms “right” up front • Example • PERC Water’s Santa Paula, CA Water Recycling Facility • Strengths • Control over design, build and operations process • Very long-term cash-flow stream • Challenges • Structuring of financial and operational risks • Political acceptance • Rate setting mechanism • Example • Publicly traded utilities Investor Perspectives: Potential Pension Fund Investment Structures

  9. Table of Terms CONTACT INFORMATION

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