Welcome to the Brookfield Infrastructure Partners Third Quarter 2017 Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Rene Lubianski, Senior Vice President, Corporate Development. Please go ahead, Mr. Lubianski.

Thank you, operator, and good morning. Thank you all for joining us for Brookfield Infrastructure Partners third quarter earnings conference call for 2017. On the call today is Bahir Manios, our Chief Financial Officer; and Sam Pollock, Chief Executive Officer. Following their remarks, we look forward to taking your questions and comments. At this time, I’d like to remind you that in responding to questions and in talking about our growth initiatives, and our financial and operating performance, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on known risk factors, I’d encourage you to review our Annual Report on Form 20-F, which is available on our website. With that, I will turn the call over to Bahir.

Thank you, Rene, and good morning, everyone. Brookfield Infrastructure had a solid third quarter, as we generated funds from operations or FFO, of $301 million which translates to $0.81 on a per unit basis and represents an increase of 19% compared to the prior year. These results were on the back of meaningful contribution from new investments that closed over the last 12 months and another solid quarter of organic growth. Each one of our operating groups performed well during the quarter. On a holistic basis, results in our businesses grew by 10% on a constant currency basis, and outlook for each one of our operating groups remains positive for the balance of the year and heading into 2018. I’ll now give a quick overview of the results for each one of our operating segments, touch on some key operational matters and then I’ll turn the call over to Sam who will take you through the various growth initiatives that are underway. So, first, I’ll start off by discussing results for our utilities operating group that generated FFO of $170 million in the period, representing a step change increase over the prior year. Our results benefited from a sizable contribution from the Brazilian regulated gas transmission business acquired in April this year, as well as additions to rate base, predominantly in our Chilean transmission and UK distribution businesses, and upward inflation adjustments across the group. Results in this segment were modestly offset by the impact of the sale of our Canadian electricity business and to a lesser extent from foreign exchange. On the operational front and as previously noted in prior communications, we’ve been very focused on the execution of our integration plans related to our newly acquired gas transmission network in Brazil. To-date, management has successfully internalized the finance,…

Thank you, Bahir, and good morning, everyone. As Bahir alluded to at the beginning of his comments, we’ve been focused on setting the stage for the next phase of our growth in business. To elaborate on this, I’ll start by providing updates on some of the key organic growth initiatives underway and some of those that are already contributing positively to our results. Firstly, our UK regulators distribution business, our growth outlook for the next year is robust. This is supported by a strong healthy market in the UK with planning permits at record high and housing registrations reaching to highest mark in a decade. As part of our continue strategy to capture this growth, we are close to finalizing agreement with the leading energy retailer to secure up to 2 million smart meters, which more than doubles the size of our smart meter offering, a significant accomplishment for this business. With this contract, we will secure up to 3.5 million meters, which we will look to commission over the next few years and are on track to deploy nearly $1 billion into this business at excellent risk-adjusted returns on our capital. Our natural gas transmission business in North America continues to capitalize on changing flow dynamics in the U.S. with Phase 1 of our Gulf Coast expansion progressing at plan and continued interest in support of Phase 2. During the quarter, the business also secured a significant agreement to transport gas in the Permian basin with incremental revenues beginning in 2018. The business is pursuing approximately $300 million of potential expansion projects. If these materialize, they could generate approximately $45 million in incremental EBITDA to BIP. We expect to provide further updates on these opportunities early next year. At our telecom business, our management team is beginning to position…

Thank you. We will now being the question-and-answer session. [Operator Instructions] Our first question is from Cherilyn Radbourne of TD Securities. Please go ahead.

Thanks very much and good morning. I wanted to start by asking about the smart meter opportunity. Relative to the rest of the capital project backlog which has a duration of two to three years, I believe the capital outlays for smart meters occur over a slightly shorter time period and you also start to earn a return effectively as soon as you’ve deployed the capital. Maybe you can just give a little bit more detail there?

Hi, Cherilyn. It’s Bahir. I’ll start off and maybe Sam will chime in as well. But, you are absolutely right. We do connect these meters and they take a bit of time to fully get them adopted. But, as soon as you deploy the capital, you do earn that return right away. So, you are right, on that front. Included in our backlog today, there is about $200 million, which we expect to adopt over the next 12 to 24 months, and so that will aid our results further. And as you would have seen from our communication included in our “shadow backlog” that we’ve spoken about before, was an investment in another 2 million meters that will require about $500 million plus of capital that we are getting pretty close on. And so, should we be successful on getting that done, that will boost results further, for that segment.

Great. And then, it was very encouraging to see the traffic growth on your toll roads, maybe you can talk a little bit about how the recovery is progressing in Brazil and how that’s impacting both, the toll roads and your GDP-sensitive business, the rail operation?

I’ll start and maybe Bahir might add to it as well. I would say first that we’re obviously very encouraged with the recent progress in the economy down in Brazil. Bahir, I think spoke to a number of the statistics that have recently come out, which interest rates coming down dramatically from a year ago 14.25% down to 7.5%. That’s obviously having a really meaningful impact on the country. Inflation is down to almost I think 3% but I think in some month it’s been almost zero. And we are seeing growth. So that’s all positive. And that’s happening even without, I would say, a meaningful change on the political side where there is still some uncertainties. We expect that to get cleared up next year with the election. I’d say, the improvement in traffic, we have really started noticing [ph] late spring or early summer and it’s just been accelerating since then. As far as the benefits of this improvement in the economy -- I guess, it affects us several way. So, the most impacted is the toll roads; it’s the most impacted when the company struggles, both impacting the interest rates and also the economy. And it’s the one that’s rebounding the quickest. With respect to our railroad, part of the business that’s exposed to the industrial sector, I would say is benefiting from the improvement in activities there. We didn’t see as much of a fall off in that business related to the agricultural sector because that sector actually stayed fairly strong. So, most of the benefits that we pick up in the rail, will come from the expansions that have taken place. So, that’s all positive. But, the improvements won’t be necessarily as GDP related. And then, in NTS and our transmission businesses, they’re not GDP related, but the fact that interest rates are coming down, will help reduce interest costs for our transmission business which is fantastic. And for NTS, the opportunity to finance the business and put some leverage into it, will probably happen a lot sooner than we ever expected. As you know that investment was done on a completely unlevered basis, because we thought interest rates were too high. But given that they have moved down so much and that the Petrobras has already experienced an upgrade and the sentiment for capital in country has improved dramatically, it’s likely that we will be to refinance that business possibly [ph] the first question next year.

The next question is from Rupert Merer of National Bank. Please go ahead.

So, looking at your exposure to Brazil that’s I think 38% of FFO. Now, I believe over the long run, you plan to reduce that, but two parts of the question. First, how comfortable are you with the exposure right now? And then secondly, how can you manage that exposure? I imagine borrowing is one way that -- are you looking at any other strategies like currency hedging?

Hi, Rupert. It’s Sam. I’ll start with that and again, Bahir might jump in. So, I guess the first thing, maybe just touching on strategically are we comfortable with the level we are at now. And I’d say -- I’d almost comment a different way and say that strategically we thought to make more investments in the last period of time in Brazil because we felt this was a once in a decade or even longer period of time to buy for extreme value. And so, when we look at the investments we made with NTS and with the transmission, these are the most ultra critical assets in the country and we bought them for tremendous value. So, the fact that we were able to lock that in, I’m thrilled with. But, I expect as we’ve been telegraphing to people that the window of these unbelievable opportunities was very short. And so, we will now have to look at different places to invest our capital, and things will just down settle naturally over time. So, very comfortable with where we sit. I feel like we have all the right wins that are back in the country and we were able to buy assets that we probably never thought we ever could buy. So, that’s good from that perspective. As far as risk management, I think you touched on the main thing, which is the ability to extract out capital through leverage, given that we’ve underleveraged most of the businesses, particularly NTS. We will do that; that will help manage some of the currency issues. We probably won’t put any currency hedging in place. Historically, we’ve not found the market to be deep enough. And so, the cost of hedging really wasn’t representative of the true purchase price parity that exists between the U.S. dollar and the real. So, at this stage, we’ll do -- put the leverage in, we’ll monitor the operations, and I think that’s the current plan.

Secondly, on Indian telecom, you’re viewing a number of opportunities there. We have seen some other transactions in that market recently. How competitive this is the market, are you comfortable to be able to achieve your return hurdles?

Well, look, our view is that there is more assets for sale than there are buyers. There is -- nonetheless for a few people like American Towers who have business there, it was strategic for them to go and buy the portfolio that Vodafone put up. But that’s literally probably 1/10 of the assets that are for sale. And outside of American Towers and maybe a few other privet equity players, there really isn’t a deep buyer market. And so, we do think we can buy for good value and at scale, but time will tell. These are large companies that are selling it. They don’t have to sell, they don’t want to, and we’ll price our capital appropriately.

The next question is from Devin Dodge of BMO Capital Markets. Please go ahead.

The 300 million potential expansion projects at NGPL that you highlighted, can you help us understand, which projects are within that group? Just wondering, if it includes both spaces of the Chicago Market Expansion and Gulf Coast Reversal or is there more to it?

Hi, Devin. It’s Bahir. So, the $300 million -- so, in our existing backlog is a second phase of the Gulf Coast expansion that we are executing on and hope to bring to completion by next year. And then, included in the $300 million backlog number is another phase of that and that makes up a big bulk of that number, in addition to several other smaller contracts that are doing around the Permian and Waha regions.

And then, when we think about the Indian market, it seems like there is lots of opportunity. You are obviously more focused telecom infrastructure and toll roads. But are there other sectors that look interesting and is there a limit to how much capital you would be comfortable deploying into the market?

I guess yes and yes. Firstly, just on other sectors. We are mostly focused on roads and telecom. That’s where we see the best opportunities today. There are a few other sectors that we have always just monitored; airports I guess is one and transmission is another. But, I would put the likelihood of transacting in those sectors anytime soon as fairly remote. I think we will stick to the two sectors that we are currently looking at. And as far as the amount of capital that deploy -- there is sort of a limit to how much we might be prepared to put in that market. But, I would say a lot of it also depends on how attractive we see the opportunities. So, if we are able to do a tremendous investment that we think is a very unique point, then, you might do something little larger. But, I think it all depends on the situation.

And then, just last one for me on the asset recycling program, any updates you can provide there? I think last quarter, you talked about we could see something potentially in the back half of this year or early 2018, just wondering if that’s still the case.

Yes. We’re fairly tensed on one particular situation, but we don’t have an update for the market yet, and we will just see how things progress over the next little while. But, our hope would be that one way or another, we would have an update on that soon.

The next question is from Andrew Kuske with Credit Suisse. Please go ahead.

I guess, the question is really related to the liquidity position and the excess liquidity, you telegraphed just [ph] point of lots of opportunities out there; we saw a bit more liquidity than you normally have. So, how do you think about normal liquidity? And then, how do you also think about just the cost of having that excess capital on your balance sheet, right now?

Andrew, maybe, I’ll touch that one, because -- I think it’s an interesting question, because I think you can approach it as -- there is obviously a mathematical cost. You can now always calculate the drag of carrying liquidity and the negative above that. But, we’ve always felt that, strategically having liquidity and being able to respond quickly and aggressively to exciting opportunities that come up, you can put a price on and that for us we should probably [ph] put ourselves in that position. And even though we might take a little bit of flack for having too much liquidity at certain points in the cycle, you just can’t at optionality having that cash available to take advantage of those things is price. [Ph] And so that’s kind of our view, right or wrong. I know mathematically, it may not work for some but we just think that’s the way we should run the business.

And then, maybe just hopping into another liquidity pool, and this was one of the dialogues at the Brookfield Day is effectively the high net worth channels and the private bank channels. So, what initiatives those dips specifically have, either now or planned into the future really [technical difficulty]?

This is really Bahir’s alley. He spends a lot of time thinking about accessing new investments for BIP. So, maybe I’ll turn over it to Bahir to talk a bit about some of the stuff he is doing with -- and in fact, some of the analysts yourself included are super helpful in that regard.

No, it’s great. And so, this is an initiative that we started off here in Canada. And just given the familiarity with the people here, it’s bodes very well for that investor base. And we’ve been doing a lot of sort of teaching, such things et cetera using a number of the banks here in Canada. And now we’ve expanded that program into the U.S. where we are getting a huge amount of success through, again, using the various brokers and you’ve been to help following in that regard Andrew, and some others as well. Because there is an immense amount of capital that’s out there in the U.S. and Europe and to a lesser extent in Asia we think opportunity set is big but it’s just going to come with more education. But, I think our story bodes well for this investor base and this is definitely something that we’re going to be very focused on for the balance of the year and heading into 2018. Is that helpful, Andrew?

That is helpful. And is there any kind of target size you are thinking of that market? And [indiscernible] number that Blackstone’s got at the top of the house about $50 billion capital from private banks...

So, look, I think, we’re probably talking two different things a little bit. When Blackstone tops $50 billion there, they are really getting large cheques from PIF et cetera. And I think most of their non-maintenance [ph] cheques are really using the traditional channels that we would use. And I suspect, when it relates to infrastructure, they don’t have near the penetration that we would. And I think it will take them some time to do that. I guess, what we are -- we have a number of things going on, not just for BIP or for BAM. We are looking at super core funds that will tap into different groups that Blackstone targeted. I guess what Bahir and I were mostly talking about here was just expanding this BIP investor base. And we don’t think that we have really maximized the number of people who could invest in a unique infrastructure story. And we know that based on our contact with investors in our institutional funds, the appetite for infrastructure product is massive. And we think that most of those people who aren’t the large institutions, should look at as a proxy.

So, lots of investment on both sides? [Ph]

In which size? I don’t know, it’s -- I would love to see Bahir expand the investor base by 500 to a $1 billion a year if he could.

The next question is from Robert Kwan with RBC Capital Markets. Please go ahead.

Maybe just building on the question around potential limits on investment in Indian, just when you at your overall business and I guess this is also building on the Brazil question. How do you think about where you want to be in terms of cash flow or asset mix between OECD and emerging markets?

So, Robert, we don’t have hard and fast percentages. I think we’ve always felt that just based on the activity level we see and the actual opportunities that 70-30 was -- 70% OECD, 30% maybe emerging market was a realistic or likely outcome. I just think it’s going to go through phases. And I guess our strategy is to make sure that we are diversified across sectors, across regions, invest -- where we can buy unique and scaled franchise anywhere and that opportunity arises, we act decisively. Over time and our regular business as we just build up through organic opportunities and different things, things will level up. So, I would I guess hope to convey to our investors that we shouldn’t focus too much on the near-term blips and that really we should focus on are we buying great businesses at certain points in time and then longer term ensuring that the business does have that diversity that protects us from counterparty risk or sectorial risk or disruptive technology risk and currencies. I think we shouldn’t focus too much on currencies, we need to focus on the whole array of risks.

And I guess as you tilt away from that longer term mix towards more emerging markets, can you just talk about how you think about trying to set yourself up in whether it’s debt leverage or payout ratio? Do you actively look to be more conservative, given that sometimes when things get us soft globally, lot of the correlations in EM, go to one?

Well, it happens naturally because each business gets financed on a standalone basis using investment grade metrics. And we just can’t leverage Brazil or other markets aggressively and we don’t. So, that acts as a barometer in any event. And I think we’ve always had a very conservative, robust balance sheet and our payout ratios had never been high. So, I don’t expect that we will change what we are doing. We will just continue to run the business conservatively, keep our payout ratios of that 65% to 70% ratio, and obviously keep an eye up for the future. If we see anything that worries us, then we’ll manage the business accordingly.

If I can just finish on the new Indian toll roads, given that they are finishing construction and are new, is the return profile that you expect it to be I guess as a parallel similar to AVN which was new at the time, are you ramping return profile or is this expected to be different? And then, I don’t know if you’re willing to give any comments on expected returns?

Yes. So, the good news is that one of the roads is basically done now and through the second road that will be probably Februaryish. And look, I would -- what I would say is we should earn mid to high teen type returns. We think that we are getting a premium to what other people are paying for complete roads, probably 300 to 400 basis points. And so, it definitely pays for us to be more creative when we do it. And in relation to the profile, I think the -- AVN probably had a bit more of a curve to it; the going in FFO there was relatively low, but it was due to a number of factors. Some of it was due to the ramp up, but it also had -- it come off a period of time when there was an earthquake and so traffic was a little depressed when we first bought it. And then, also because it has a such as favorable terrific regime where we get inflation plus 3.5% real which is more favorable than what we get in Indian roads, you have much more of a growth profile to the cash flows. So, this one is more steady, higher going in returns. That one was a very unique road, and it’s played up fantastically, obviously, but just a different profile.

[Operator Instructions] The next question is from Matt Boris [ph] of Raymond James. Go ahead.

Further on your capital recycling program, do you see current market conditions as favorable for the sale of any particular appetites and which segments are you looking at for these sales?

Hi, Matt. It’s Bahir. So, we definitely think the current market environment bodes very well for mature, fully contracted and stable assets. There is a lot of people out there buying for these kinds of assets. And I think we have a few in our portfolio today that are ideally positioned for those. So, definitely, we do think that this is -- we are in a period here for couple of years but that’s going to be quite favorable.

Can you disclose which segments you are looking at?

I would just say that we are just looking to sell, as I mentioned, pretty mature assets. But, I can’t get into much more detail than that.

And are there any opportunities in emerging markets, Brazil and India and for the district energy offering or is it kind of only expense in developed markets at the moment?

We are not currently pursing anything. We have reviewed and analyzed the market a little bit for that. I guess, today, we have mostly focused on markets where there are established precincts and more brownfield type of rollup opportunities as opposed to -- I would say India and Brazil would probably be more greenfield type systems. And so just from a time and energy perspective, we just felt that there is lots of other places to focus on before we go and spend time in those markets. But I’ll just longer term, absolutely, those are the markets we should focus on wherever there is real estate development and particularly as the prices become bigger and the ownership of real estate is more institutionalized then that makes for great market conditions.

This concludes the question-and-answer session. I’ll now hand the call back over to Mr. Pollock for closing comments.

Thank you, operator. And we would just like to thank everyone who is on the call this morning. We appreciate your interest and all the questions, and look forward to updating you on our progress next quarter.

This concludes today’s conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.