INSTITUTIONAL INVESTORS ROUNDTABLE (“IIR”)

EXECUTIVE SUMMARY

1. Introduction: The need for institutional investors to innovate in the way they invest

   Large institutional investors are seeing a need to change the way that they invest in several key ways. Notably:

   • New models for investment are required that optimize the long term investment horizon and economic interests of these institutions;
   • The global deficit in infrastructure and the globalization of capital opportunity is creating investment opportunities that are beyond the scope of any single investor;
   • The lack of alignmnet between investment intermediaries and institutional investors has led to a re-assessment of external management strategies.

   As a result, major global investors need to innovate by developing new ways to invest and to cooperate to implement these changes and by accessing efficiently investments in very large scale assets that provide the underpinnings of a country or regional economy.

2. Description of the IIR
   
   
   1. Vision: The IIR is a peer-to-peer round table for strategic leaders of global institutional investors to: (i) explore ways of improving collaboration among themselves; and (ii) to consider exploring tangible innovative ways to invest through leveraging one another’s expertise while lowering fees and reducing dependence on intermediaries.
      
      The IIR holds two meetings annually: one in October in parallel to the Quebec City Conference in Quebec and another in May hosted in rotation by participating institutional investors. The next meeting will take place on May 12 and 13 Charlotte, NC (U.S.), in collaboration with TIAA-CREF. The semi-annual IIR meetings (“Mothership”) include a maximum of two representatives from each participating institution. “Sub-Groups” of volunteer participants are created to implement specific investment projects or opportunities and report to the larger group at subsequent meetings. Satellite groups with specific focus (real estate, infrastructure, etc.) will eventually get formed where investors can talk about their specialty without needing to sit through conversations that do not pertain to their field.
   
   
   2. Focus: is on investments at a strategic level ("IIR Subject Matters"), mainly:
      
      
      1. exploring ways to improve sharing of information and potential investment opportunities among global institutional investors;
      2. considering tangible innovative models to invest through leveraging each others’ fields of expertise while lowering fees and reducing dependence on intermediaries;
      3. considering specific investment opportunities requiring syndication among institutional investors.
   
   
   3. Objectives. A critical – but challenging – objective for the IIR is to meet both of the two following objectives:
      
      
      1. IIR needs to be a “trust building platform”– Participating institutional investors have insisted that the IIR meeting (as opposed to “Sub-Groups”) must be conducted in informal (but organized) ways that optimize networking among decision-makers for investment strategies
      2. IIR needs to seek and produce “tangible results”: Participants were also adamant that the IIR produce tangible results and that the IIR is the appropriate environment for evaluating strategic investment opportunities by institutional investors, but the “ground work” and implementation of such opportunities require the involvement of investment specialists who do not participate in the IIR.  Hence, the need to create the Sub-Groups and the “satellites” that will meet in parallel to the “Mothership” when the group grows larger.
   
   
   4. Format. The format of the IIR reflects the dual objectives in section 2.3. The semi-annual IIR meetings (“mothership”) need to be designed around the objective in 2.3 (a) (“trust building platform”), and that “Sub-Group initiatives” must accomplish the objective in 2.3 (b) (“seeking and producing tangible results”).
   
   
   5. Formal IIR Semi-annual Meetings (“trust building platform”):
      
      
      1. Type of meeting: peer-to-peer discussions in a round table format. Participants mentioned that formal IIR meetings should be the “mothership” of the IIR.
      2. Participating investors (“Like-Minded-Investors”): Institutional investors (pension funds, SWFs, government reserve funds and other long term equity investors) from all major economies, that have the capacity and interest to invest both directly and indirectly in infrastructure and private equity, and that are interested in exploring new investment models and new ways of collaborating with other global investors
      3. Seniority level of participants: Participants in the IIR should be executives at a strategic level (Chairs, CEOs, CIOs, Heads of alternative investments, etc.) of Like-Minded-Investors;
      4. Exclusivity: participation should be strictly limited to those institutions identified in paragraph (b) represented by the kinds of participants identified at (c). Large equity investors significantly engaged in managing assets for third parties would not be invited to the IIR.
   
   
   6. Sub-Group Initiatives (“seeking and producing tangible results”):
      
      
      1. Description: A substantial part of the agenda of formal IIR Meetings consists of identifying and evaluating tangible innovative investment models and/or specific investment opportunities. When a specific opportunity elicits enough interest among participants, a “Sub-Group” is formed consisting of volunteer institutional investors under leadership of the proposing participant(s) with the facilitation of IIR co-organizers. Each participant involves its internal specialists as it may deem appropriate to explore the opportunity in a collaborative way. The Sub-Groups report on their progress at the next IIR Meeting to allow a broader discussion among all participants of the IIR. Several Sub-Groups work in parallel on different opportunities.
      2. Participants: are executives chosen by each participating institutional investor in the Sub-Group by reason of their expertise in the sector contemplated. Special guests may be invited by Sub-Group leaders when needed.
      3. Seniority level: shall be decided by participating institutional investors of Sub-Groups.
   
   
   7. “Field Trips”:
      

      The IIR intends to organize on a regular basis trips in countries of interest to major institutional investors, where participants will be invited to meet privately with the national opinion leaders and decision makers in different sectors of activities, to learn about the potential for local large scale investment opportunities and to build high level long term relationships. In addition, this annual activity aims at solidifying the relationships among IIR participants. A first experience was held with success in Russia in May 2011.

      As a result, this activity intends to achieve both objectives described at paragraph 2.3 above.

   8. Distinctive characteristics of IIR:
      
      
      1. Inclusivity. As opposed to “investors’ clubs”, the IIR is open to interested Like-Minded Investors who accept the rules of Engagement.
      2. Neutrality and integrity:
      1. Internally: The IIR’s agenda, format and content are determined for the sole purpose of fulfilling IIR participants’ objectives. No participant or group of participants has disproportionate rights or influence in the IIR. All participants are treated equally (no special treatment for “founders”). No organizers will engage in ““selling” activities around the IIR;
      2. Externally: The IIR is apolitical in its activities and does not engage in political advocacy.
      3. Confidentiality: There are no minutes of meetings (“Chatham House” rules). However, “Conclusions” are prepared by the Co-Chairs of the IIR to reflect the decisions made and the action items retained at each meeting.
      
      
3. Governance of IIR:
   
   
   1. Corporate structure: The IIR is a not-for-profit corporation founded by Christian Racicot which is part of the Quebec City Conference.
   2. Role of Organizers: The Chairman (Christian Racicot) and Vice-Chairman (Alberto Haddad) are responsible for the preparation of the agenda of IIR meetings with the assistance of an “Advisory Team”, and for following up on the progress of each Sub-Group. They are also responsible for recruiting the members of the Advisory Team and managing it.