Brookfield Renewable Partners L.P. (BEPUN) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to the Brookfield Affiliates 2022 Investor Day. Thanks for joining us, both everyone in the room here and for those watching online. My name is Suzanne Fleming, and I head Communications for Brookfield. Today, we're going to start with fireside chat with Bruce Flatt and Mark Carney, moderated by BNN's Amanda Lane. Then we'll have an update from Brookfield Renewable Partners, followed by Brookfield Business Partners and, finally, Brookfield Infrastructure Partners. We'll leave time for questions at the end of each session. And for those of you in the room, if you have a question, just raise your hand, we'll bring a mic. And for those of you online, just submit your question in the box on the screen. And as always, we'd like to remind you that in responding to questions and in talking about new initiatives and our financial and operating performance, for the Brookfield companies presenting today, we may make forward-looking statements, including forward-looking statements within the meaning of applicable Canadian and U.S. laws. These statements reflect predictions of future events and trends and do not relate to historic events. They're subject to known and unknown risks, and future events may differ materially from such statements. For further information on these risks and their potential impacts on our companies, please see our filings with the securities regulators in Canada and the U.S., which are available on our website. And with that, I will hand it over to Amanda.

Thanks so much, Suzanne, and it's a pleasure to be with all of you and to be here with Mark Carney and Bruce Flatt, who, of course, both of whom need no introduction in this room or spear. I want to start with a question about unforeseeable events and how it affects your thinking. And if this were a few days ago, a week ago or so, we probably would be talking about surprise Russian war on Ukraine. Today, we're talking about 1 of the most stable economies of the world being put on notice by the IMF for the behavior of its government. The U.K. and the actions of the last week are unforeseeable risk in the world. And Mark, obviously, as a former central governor Bank of England Governor, you have a view of all of this. I wanted in that lens, and I'm going to force Bruce to answer it as well because it's the kind of event that when you're trying to set strategy and run businesses and allocate capital, it's a pretty big headwind, and it's certainly one you can't predict.

I don't know anything about the Bank of England. Yes. Okay. Okay. Well, first off, it's a pleasure to be here, and thank you all for coming in the room and online. I guess the first way I'd answer that is what's foreseeable about the unforeseeable event, and we'll take the situation in the U.K. The first is from a market dynamic perspective, without question, risk premia are coming back into all asset classes, whether that's credit, currency, equities, et cetera. We've foreseen that, and we'll get into the specific strategies over the balance of the day, how we're well positioned for that. But that's foreseeable, and that's going to continue. And we're in a process of repricing risk that has a ways to run the first thing. The second is to go to the macroeconomics of it, the strategy of the U.K. government. The first thing that's foreseeable about what they did is the objective of the budget or the mini budget, as it was described, was to increase the trend growth rate in the U.K. to 2.5%. The focus was on the supply side of the economy. And that's foreseeable because what's happening in the world is we're going through this process that we tried to describe it as a hinge moment in history, where the supply side is becoming much more important. The nature of globalization is changing. It's not ending, but it's changing. There's more fragmentation, so you're going to be live to that. Governments are more constrained, without question, we'll get into that. And that means in infrastructure and renewables and the energy transformation, greater reliance on the private sector. Everybody has to think about resilience a lot more. If we've learned anything from the last 12, 15 years of shocks, finance, health, defense, geopolitics, et cetera, supply chain shocks that you got to build resilience in as well. So what's foreseeable is the strategy, what was perhaps less foreseeable was the execution of the strategy. And I'll finish on this, which is that the challenge that has played out in the last few days is that the strategy has been executed in a way that promised the improvements in growth, the sort of measures that would improve growth. And most of those measures don't involve spending money involve changing regulation and approaches. There's still to come. The spending of fiscal capital, if you will, fiscal space was very short term, was unlikely to have the benefits there and wasn't costed and then ran directly against what the Bank of England was trying to do. And that's where the risk premia came in, and we saw quite a sharp repricing of risk, both for the currency, for the credit, the sovereign credit. And then that's spilled over more broadly in the financial markets in a very short-term way and what the Bank of England did yesterday is doing for the next few weeks is a way to take that last bit of the risk premia out. So yes, things will happen. But the bigger trends are foreseeable, are going to price risk. There's huge infrastructure and other needs. The supply side really matters. And because those are foreseeable, we can build a strategy around those.

Which sounds a bit, Bruce, as though you can look through these events and stay true to the big trends that you were already basing your strategy on. Is that how you treat this kind of -- I don't want to call it noise, as it's a pretty serious thing that's happening right now. But do you look through them at those strategies you're already pursuing because they're big slow-moving events?

So before I do that, I just want to say on behalf of everyone at Brookfield, thank you for being here, and thank you for participating in our companies this event and everything we do with you. So thank you. So I want to give advertisement first. . Look, I would say Look, I'd just say every crisis we have is always the worst crisis we have. Everyone looks down and freaks out and says this is a terrible thing, and there's never been anything as bad before. And then 2 years later, we have the worst crisis we've ever seen, and we've never had one that's been as worse. And it always is at the time because it's always different. And so I would just, I guess, my only comment on all of these things, and I don't have to run a government but is -- if you have a long-term plan, if you have a long-term business, as long as you're thoughtful about it and don't get yourself in financial trouble, these things come and go. And I guess I -- that's what we try to see through. but there are along the way, you can always advantage yourself or capitalize on situations which offer opportunities that you wouldn't have otherwise had. And so I'd say that, like, I guess what we try to do is keep clear heads in times like this and just keep -- a, keep going at the things you've been doing. And we're in a fortunate situation. We have large sums of capital on our balance sheet and in our different funds to be able to put to work, and we are and we will put more money to work probably at things. If you go -- if you look back 2 years ago, if you were buying them then, they're going to be these ones will be great. Those ones might have been okay. And so it just -- it affords opportunities you wouldn't find otherwise.

So -- and you, in part, jumped ahead because it's anybody that knows Brookfield would know you have, in your history, taken advantage of moments of what people would call great crisis, post credit crisis. You made important transformative acquisition. You could argue even that Oaktree a couple of years ago was a view to where things were going. Given what's happening now, is there a -- when you put your head on the pillow at night, is there a part of your brain that's thinking, what is the opportunity here in all of this that I hadn't seen until now? Or is it a kind of a through line as we're talking about?

Yes. Look, I -- what happens in times like this, and we've seen it over the past 25 years in the asset management business is that sovereign institutional plans keep getting bigger and bigger and bigger. They can only manage so many relationships. And at times like this, they consolidate into the few that are -- they're comfortable with are strong and that they can grow with. And so I'd say the biggest thing for us is just keep steady, keep building, keep growing, keep putting their money to work, and you come out the other side, much, much stronger. Our -- I kind of think of this as we're still in the crisis, it was created in February of 2020. This is not a new crisis. This started in February of 2020. We floated our way through with Central Bank money. And we're now just having the ramifications of it. We're going to have the recession we never had in 2020. And so I think of it as a compendium and are -- we got into the insurance business in mid-2020. And I think that's going to be a very exciting opportunity for us in the fullness of time as we execute what we want to do in the insurance business.

And I want to -- we are going to talk more about that because I think you've got pretty ambitious plans on that front. I do want to say also somewhat belatedly to the folks in the room and on the live stream that we will welcome your questions at the end. I'll call for them, so either in the room or I've got an iPad here taking at them from online. So there will be an opportunity. If you have a question as it comes up, just file it away for now. Mark, I do want to just step back to this hinge notion. It's a reference to Churchill. For those of you who have seen Mark speak about this before. It's an important line of thinking. It predates the pandemic. It's a slow-moving trend, but it does -- it's one we've all seen pieces of, but you've got a kind of a comprehensive view of what this means. So just flesh it out because I think it's really important for people to understand because I think it will change our thinking about some things.

Yes. And I think the element of it is a greater emphasis on resilience as opposed to efficiencies. So look, I started my career in finance in the city of London just before the fall of the Berlin Wall. And basically, for the vast majority of it, really up until the last few years, it's a process of steady integration of the global economy, convergence, deregulation. These are the broad brush trends. . Huge benefits to the world, billion people out of poverty and on. However, there's a series of shocks, and the first one is the financial crisis. back in 2008. And the response to that is, okay, we need to build resilience in the banking system in the core of it. So there's more capital, there's more liquidity there. Then we get the shock to the euro crisis. They do various things in Europe to help shore things up. COVID, health, we know we need to spend more money on health. I mean that's obviously preventative. Russia, geopolitics, more money on defense. Everybody is going to open defense. A lesson for companies has been that single source, very stretched supply chain -- global supply chains have risk to them. They've got great efficiencies, but they have risk. So even before you start putting in geopolitics on top of that, which you've had to since February 24, and you think about building resilience in that as well. And that's a shift. It's a regime shift. And it's a regime -- and it's accelerating. I just want to reemphasize something Bruce just said around COVID, and you were nodding, so I think you agree, which is that we're almost in 3 acts of COVID. We had the first act, which is we all locked down, we have the health. Then we have this gradual and 2 steps forward, 1 step back process of reopening at different paces, different parts of the economy. We're still at the early stages of the readjustment or the rebalancing of the economy that goes from that. But it's in the context of a world that puts greater weight on efficiency -- or sorry, resilience relative to efficiency, where governments are very, very constrained. And then in terms of the investment backdrop, where we're out of the world of low for long, we're in the higher -- not just higher for longer in terms of Fed policy in the near term but arguably, in terms of longer-term interest rates, moving back to a more normal level of 10-year rates. So we think about terminal value a lot. We always think about terminal value a lot, but we think about it in that environment. Also, I would add, and we'll hear more about this in an environment where the world is moving to a lower carbon economy. So we have that lens as well. So those are big, big forces that, in many respects, this is not a dark story because you're returning to something more normal, right? It was an abnormal period for the last decade plus. It's a little painful going from one to the other, but we're positioned for that. And then we're also in a world where it's going to mean a lot more investment and a lot more investment closer to home. Friend shoring means investment closer to home, protecting your data means investment in data infrastructure, Sam will talk about that closer to home. Moving towards resilience in energy systems means -- investing in renewables closer to home. And so there's a big capital component of this as well. And it does mean if we get it right, the collective we get it right, that we don't have -- we'll always have crises. There will always be shocks, but they're not as sharp as downdrafts as we've seen in the recent past.

There are a lot of threads to pull on that. One of them that I think is going to be -- it will play out over time. But for a company, a set of companies, if you will, like Brookfield at the operating level, true this notion of from efficiency to resiliency. We can talk about it at a very theoretical macro level. It's going to hit balance sheet that's going to hit P&L. People are going to have to make decisions about supply chain and cost and how they measure effectiveness. If we move away from a world where efficiency is the thing we price the most to something else, just in case delivery rather than just in time, have you started to think about how you might shift your thinking about what performance looks like, what metrics matter?

So look, I -- yes, it's more -- it's going to be more costly, but companies can occur -- will absorb it over time. Yes, maybe they'll make a little less profit but they'll figure it out some other way. I do think, though, these trends that Mark just mentioned are unbelievable trends, and we just happened to get lucky and that we're in the midst of them. The reshoring of battery plants, semiconductor plants, health care goods is coming back and it's all coming back. It -- all is a strong word, but a lot of it is coming back, and this is trillions -- and the team will talk about it later. And the energy transition, it's an enormous build-out in the Western world. And before, it was about carbon lowering carbon. But today, it's about energy security. There are only 3 ways to have your own energy security if you don't own local natural gas that you pull out of the ground yourself and that solar wind or nuclear. And every country in the world, and we talk to them all, every country in the world is going there. So these are enormous trends that are happening, and there's going to be a lot of money put to work. And you ask what changed in this environment. The fact is we have very significant amounts of capital to put to work in those businesses and are known for it. Therefore, people come and talk to us. And increasingly, our business is about being a good counterparty, so people want to deal with us, having large sums of money and helping them achieve their goals. And I'm not sure -- that wasn't our business 15 years ago, but that increasingly is our business today. And with what's going on, it's highly attractive.

One of the kind of poetic things thinking about this period of history that starts with the fall of the Berlin Wall, and you make this point is you could almost bookend it with Putin's aggression in Ukraine. That is sort of this -- the end of that era. For those of us who literally grew up, professionally speaking, in that era, you can't help but be a tiny bit disheartened by Intel building a fab in Arizona. But the onshoring trend does run contrary to a long time of thinking that globalization is better, that global integration is better, that the competitive advantage is the rule that we should all live by. Is there a chance that those beliefs and forces will reassert themselves, that this will be a short-term trend.

Before he goes, I'm going to say I'm quite heartened by [indiscernible] in Arizona .

Well, as you say, Bruce, you're very well positioned for this trend for sure. So I guess the risk is, does it -- is it a short-lived trend?

Everything gets blown out of proportion at extremes. Right now, the stock markets are selling off. Well, they'll go back. Like these things -- everything gets taken at extremes. The one1 thing, though, is United States cannot have all of its semiconductor chips, which runs everything in the economy, not sitting in the United States of America. That's not -- that can't happen. It just can't be. It probably shouldn't have happened. It did, but it probably shouldn't have happened, and therefore, it's coming back. Now is everything coming back? No. But a very significant part is coming back to America. And there are lots of other things because they just can't take the risk. The gas situation in Germany is really unfortunate. It could have been avoided. And that is -- that's what's happening. .

Yes, I think that -- I mean, that's absolutely right. And you think -- let's give an example from, let's say, outside of business, although business supplies it, which is France had more than a year supply of PPE and masks and things as part of their pandemic preparedness up till about 2 years before the pandemic. And then somebody sat down and said, "Wait a minute, we can get it cheaper on the global market. So let's get rid of this, and then we'll just buy it when we need it." Well, guess what, when you have a pandemic, I mean, we all know how the story ends, it's global, and you can't -- so there are certain things you can't rely on in extremis. . It's why you have central banks. You can't rely on liquidity from the market, except -- and that's ultimately you have to have Central Bank. And so there's certain activities where it makes sense to have some diversification supply. I don't view -- I view that more as a recognition of things going to one extreme and pulling back a bit from that extreme. Obviously, there are geopolitical tensions, which one would hope and I'm thinking more vis-a-vis Asia as opposed with Russia, which is just so off the charts, that, that will evolve in a better place. But it still will hold that the highest value-add activities the most critical parts of the supply chain, you're going to want some close to home. And here's a key thing, and we're sitting here in Canada and they'll make the Canadian point, which is close to home. And there's a reason why the U.S. Treasury Secretary says friend shoring because it's who's a reliable partner. And one of the things we look at, and we're involved in, and I'm going to peel back on the renewable side is that as companies are thinking about where they're putting the marginal plant or getting the marginal supplier to think about this issue. And they also think at the same time, where they're getting the power from. And is it clean power because actually, I care about that I'm making 2 strategic decisions. same time. So I think we'd like to see your world where this is a trough and it's coming back. But even as it comes back, I don't think the lessons will be fully forgotten. And we've learned this lesson a few times in different areas, and it's the right application.

And you make the reference to Russia as being an example, but China being the real example. And China's shift away from Western style democracy, capitalism was happening before this pandemic. It was a marked political decision. It may be want to- when we think about that and the kind of long-term consequences, Asia has been seen as a real area of opportunity and growth for Brookfield because you're underrepresented there proportionately. Has your feeling or thoughts changed about the opportunity given the kind of political reality?

It's still relatively small for us on a global basis. When you look at it. So we keep -- I guess, what we -- what's important for us is countries have good rule of law. We buy things in the country, and we normally operate them there as a local. So what goes over borders and what transfers back and forth isn't so relevant to us. What you have to have is a reasonable way to operate and be able to run your business. And I can say that everything we've done in China, we've been treated extremely well and always been able to do everything we need to do. I don't think that's going to change in the future. So we keep investing and we keep doing things. But we're -- it's modest related to the whole business. Broader Asia, we keep building out significantly, and we'll continue to do that.

We should talk renewables. One of the things, Mark, that you are at Brookfield to do is to spearhead this part of this transition and investing in the transition. There is a lot of money that will be spent. In some ways, on a relative basis, Brookfield isn't overrepresented investing there compared to other parts of the business. But where is the risk in those investments? And I say that because, again, that the kind of regulatory environment, the political environment is very uncertain. We still don't quite know the path forward, although we know there will be one.

Yes. I think -- I actually think this is a very low-risk area. Given first, the geographies in which we're investing predominantly North America, Europe, some of the major Asian markets, certainly, proven regulatory environment, very clear medium-term and long-term energy strategies so that governments change. The trajectory might shift a bit, but it's still the same trajectory. In fact, the only changes we've really seen in the last couple of years have been -- I wouldn't even say a doubling down if you look at Europe as a whole. It's a tripling down in terms of the pace of renewable deployment, something similar in the U.K. we're seeing the market increase in the U.S. as well. So the geographies we're in, that's the first thing. The second is the cost competitiveness. Where we're investing is in proven technologies, and the cost competitiveness is just there. So it's not -- this is not the future technologies that likely will get there, which are heavily reliant on government support in order to get there. which might be, as you suggest, be taken away at a future point. And then the third thing that's important and Natalie will go through this, I'm sure she'll go through everything, Natalie, I'm teeing you up for everything that you're going to answer all detail, but is the operating expertise we bring, and that's something to all the businesses. Cyrus and [indiscernible] the private equity business focused on operating expertise. Having 3,000 operating professionals in the renewable business, that takes out a lot of risk because you know what's going on, on the ground literally on the ground, in the air as well. And you can anticipate issues. You can anticipate supply chain issues. You can manage them much better. So all of that, there's nothing without risk, but it's substantially -- substantial [indiscernible].

Amanda, I was going to add to that is that I think the thing that's really important that most people don't quite factor in. is that they still think of solar and wind from 10 years ago or 20 years ago or 30 years ago. It was nascent 30 years ago. It was starting 20 years ago. It was highly subsidized 10 years ago. And today, it literally is the lowest cost energy source in virtually every market in the world. I'm going to say it again, the lowest cost energy source in virtually every market in the world. And that's an amazing thing. And that's -- like people talk about technology. They think of Google, which is an amazing technology company. But solar and wind in a 10-year period became the lowest cost energy in the world. And that is all through technology and scale manufacturing. And so it's literally -- so it used to be risky when you had to have subsidies and some government was there and they're going to change their mind. We're just signing open contracts with great corporations to deliver them energy, and that's really what's changed in the world.

For sure, although there is still risk on the storage distribution side, especially distribution side, right? The problem with the transformation is less that we can access new sources of energy and more that we don't really have the capacity to deliver it. Our grids are brought up to this task.

Well, I mean 2 things, if I may, just piggyback on what Bruce is saying, one and directly to distribution, so a lot of what we're doing is -- I mean, it's -- there is no distribution because it's direct to the users. So PPA is direct with the company's distributed generation. We can talk about that. Ultimately, the interesting thing down the road is how that all gets knit back together. But companies are going around the grid in order to get this low-cost power for the reason we have. But the thing I wanted to add just in terms of technologies is there's 2 other technologies that, I think, give an idea to these broader trends in the strategy. Bruce mentioned one, which is nuclear. There is no transition that works without nuclear, full stop. We have exposure through Westinghouse and Cyrus' private equity business, but we look at ways to participate in nuclear, first thing. Second is around hydrogen. Now hydrogen is in a position that solar and wind were 10 years ago or so, 10, 15 years ago, where it is still dependent on government support, power purchase arrangements and others. And so we look in the case of hydrogen and to a lesser degree, carbon capture and storage, where it is more economic but still has some component of this is where can we see a floored return, where there is some support where we're confident in that. We build the expertise because we see for both of these that the trend is clear. The inflection point for the economics is coming pretty quickly, and then we want to participate quite heavily in it in just on a straight-up basis as we do today in wind and solar.

Nuclear, obviously, is -- there's going to be, as you say, Mark, we're going to need to continue to invest. But there's been -- is that a real opportunity here? Because there has been this kind of wintry period for nuclear globally, if you will. It's probably the wrong expression used when it comes to nuclear. But there've been a cooling off on our interest in nuclear. It's coming back as there's a reality around it. What role will you play in that?

Those of you that know Westinghouse operates 50% of all nuclear plants in the world. So we have a vested interest in this. But I would say -- we've been invested for -- I'm looking for Cyrus, 6 years, 5 years. When we started into it, what we assumed was because of all the information that was out there that we would run the plants down over time. That was our base case. Today, I think there's a paradigm shift. And the paradigm shift is energy security. And like -- yes, it's carbonization. Yes, it's all those other things. but it's energy security. If you don't have natural gas, if you don't have natural gas locally and some countries don't have that much sun, we're in Canada, don't have that much sun and some don't have land for solar, you need a lot of land, the only other way is nuclear. And that is coming fast. And so we're going to be building new big plants for a country's utilities but also smaller battery technologies based off the nuclear coming. And that's going to be, as Mark said, there's only one way to have a carbon-free world and that's with nuclear. So there's a whole paradigm shift going on. And I think the -- Mark may say it's the decarbonization, I actually think as important to that and what's got people now changed globally is energy security.

Before I open this up to questions in just a moment, I'll start in the room, then I'll go online, I want to talk about insurance and your ambitions there because they seem sizable. What's your vision?

Look, the vision is we provide investment products to sovereign funds, institutional clients and others, including our retail investors who invest through our products in the market. Hence, we're here today. And we try to do that in a low-risk way and earn reasonable returns. And those products happen to fit. What's -- what came to us many years ago as they happen to be the perfect asset for institutional plans but also insurance businesses. And insurance businesses don't have what we have, which is an enormous sourcing mechanism to find those type of assets. And the things that we do are ideal for insurance portfolios. So we wanted to be insurance for a long time, but it was -- the risk was interest rates were going down and down and down and down and down. And as you did that, you were taking on liabilities where there was risk. When interest rates got to 0, we decided this was the time. So we started into insurance, and I think it's going to grow. It will be very, very large in Brookfield 20 years from now because whatever liability we're taking on, on this side in the interest rate environment we're in, we're going to be able to outearn it on this side just because of what we do. And really, it's just taking the things that we do for our clients and offering them in our own portfolios of insurance. The added benefit is we have a lot of insurance companies that are clients as well, and we're going to be -- we are, and we're going to be able to provide them capital in different forms and make our products better for them because we now understand their issues better. When you do something yourself, you always can do it better for somebody else. And so it's been really beneficial in many ways, and we're excited about it.

Before I come out here, I'm both to come out here. Your -- the invested capital at the end of Q2 in your affiliates is 48% BEP, 27% BIP, 65% BBU. If we look out 5 years, any material changes in that invested capital?

Look, we have a balance sheet. We have $10 billion of debt and $100 billion of capital. So we have no need for money, let's just say that, in Brookfield. We're highly underleveraged. We intend to stay that way. It will be opportunistic. It always has been. And I think the great success of our -- if we have anything that contributes to our success, it's trying to be flexible and never get too set in the ways of what we are. And if there's some merger that comes along that's unbelievably valuable for one of those entities to combine in, and it's going to be good for everybody. we will be diluted -- will allow ourselves get diluted down. If they trade terrible and there's cash in the vehicles, we may go up because they'll be buying stock back. If they need money, we're going to support them and we'll go higher. So we have no set number, and they're all at comfortable numbers. They trade the market pretty well, and they're getting bigger and they're very, very valuable for us, and we try to have them in the marketplace. And so there's no real set number.

Ultimate flexibility. Do we have any questions from the room? I do have a question coming from online, and I'm going to pitch it to Mark, although there's an angle on it, I understood, in Bruce's view. Obviously, tackling inflation is one of the big questions, issues the world faces right now. is a loosening of the labor market a prerequisite for that? Is that tight labor market, the real issue right now?

Yes. It's a great question. I mean it's one of the elements of this process of let's call it a 3-stage process of COVID in that we're at the stage where there is scarring to varying degrees in different economies of the labor market. You see it most -- in many respects, most strikingly in the U.S., which historically the most flexible bit of the labor market, 1.5 million, maybe 2 million people out of the labor force, which is one of the challenges. So there's 2 ways for this to be reconciled. The happy way is the questions premise which is that the labor market becomes more flexible, more people come back to work, different ways of working. All these advantages come in, and the supply side solves the issue. If you're a central bank and you're at this stage of the movie, you can't wait for that. And so you have to adjust demand to the labor market that you have, and that's part of the process that's underway in the U.S. and Canada and elsewhere. And so it's -- and the softest way to do that, but incredibly hard to execute is to have the economy grow at a little less than its trend rate of growth and speed limit, and the 2 magically come together. Given the scale of the forces, that's going to be exceptionally difficult to do, which is why there's been the repricing gradually in markets and expectations. And on balance, it's more likely than not that economies will slow further before they pick up again.

Bruce, one of the implications here have been, of course, that corporate profits will be affected by a rising cost base. You could -- one can argue that corporate profit has run high for a long time. Wages have stayed lower than they needed to be or should have been, and that they could come up, profits could come down, that there's a kind of a rational writing of that. Is that -- that does affect valuations in the short term, but it doesn't have to affect them forever.

Yes. Look, I would just say, I don't think Mark is suggesting we're changing the -- I'm going to say this is a question to you. But Mark's not suggesting we're changing the paradigm of interest rates. Meaning rates are going higher, but they're still staying relatively low. Do you have a 4% or 5% interest rate, this was what was normal, and COVID 0 was not normal, and everybody should understand that -- and what's happening now is we're just going back to some semblance of normal.

This is an important question, though, I'll ask both of you for -- since 2009, some of us have waited for normal for 4% to settle back in, never did come -- is that where we land? Do we get to 4 and stay there? Or do we get to 4 and then pull back?

Going to ask the macroeconomists first.

Yes. On the one hand, on the other hand is your answer but -- then I'll give you a real answer. -- then you get the real as we can fit. I'll give you this sort of long bolster the answer then you -- but the...

Are we headed back to something like that? And I think most importantly, for the horizon, we look at a 10-year -- if you think about a 10-year rates, you're heading up towards 4%, 5%, 10-year U.S. treasury Yes, that's quite reasonable. And that's normal because you've got the U.S. economy potentially growing at 2%. You've got 2% inflation once the Fed gets it back down. And you've got a bit of a risk premium like you should get paid for owning a 10-year bond because inflation might bounce up, it might bounce -- so you have that fluctuation in and around that. And so that's -- and it's -- but it's a painful process when a bunch of assets, not ones we have, but a bunch of assets have been priced for 1%, 2% interest rates forever. And so this is the shift that's happening.

Yes. So I'd add, we -- that's what's getting killed. Like you would have a different view -- if we were -- you were up here interviewing growth stock people you'd have a different view. If you're buying things on 45x revenue, it's really tough today. They're -- like I -- on the weekends. I go through stocks and look at them that are down 75%.

Like can you comfortably make an investing decision today that predicates 4% 10 years from now, 5 years from now?

So here is what I would say I actually have amazing respect for Mark. At this point, I disagree, slightly disagree and that I think everyone today is like that Mark's view is that I think they're thinking rates are going to be too high. That number, they're going to be lower than that. Like we haven't changed so much because everyone just projects it to -- they take it today and then they say, "Wow, interest rates could be 10." And I think he eats a little bit high. but all of them, even if he's exactly right even if he's exactly right, we're on -- we're still in a low-ish rate.

But it's probably good for your business to play it like that.

Our business works unbelievably well at those rates, especially when you have some inflation. What's really good -- 90% of the things we have are positively disposed to inflation. Either contractually, you get it with CPI adjustments, either through contract or by something, you get it. And real estate, eventually, it costs more to build everything, and therefore, to build a new building, you're going to have to pay more. And you get it back. So low-ish interest rates, whether it's Mark's 5 on the back end or my 4.5 or 4, 3.5.

Was it really worth -- 50 basis at 50 basis points coming to , it's a good or

We really don't have time. We're going to look out here and ask is there anybody who has a quick question before we are actually out of time. So I'm glad you don't actually with apologies. And that is all of the time we have. I could go on, but I'm not allowed. Thank you both for that. Mark and Bruce, a round of applause, please.

CEO of Brookfield Renewable. Thank you for joining us today. and thank you for your interest and support of Brookfield Renewable Partners. Today, we'll spend our presentation talking about the stability and the growth of our business. In particular, we'll talk about how our business has expanded over the last 12 months, how our operations and approach to growth are well suited to the current environment and in particular, how our elevated rate of growth over the last 12 months, we believe is sustainable going forward. In particular, we'll also highlight actions and levers we've added to our business that are going to allow us to dictate not only the pace but the type of growth we pursue in the future to ensure that we can capture the most attractive opportunities. Jay and Natalie are going to speak about our recent growth activities and strategies and then why it will explain how all of that translates into our financials. When we were here last year at Investor Day, we reiterated this point that the tailwinds for our business were stronger than ever before. And today, we're very comfortable doubling down on that statement and saying we're in a better position today than we were 12 months ago. Brookfield Renewable is a leading global super major with over 100,000 megawatts of operating and development capacity. We have a global platform that spans 5 continents and every major renewable technology. Over the last 12 months, we've enhanced our strengths, and today, we're more scaled, more diversified and more differentiated than at any point in our history. But the way we've done that is incredibly consistent. On a global basis, we source, execute and operate using our local teams, boots on the ground in 20 countries around the world, which operate in close to 30 of the world's most important power markets. From there, we leverage our over 3,000 operating professionals to both enhance and derisk our existing assets and our development activities, and then we leverage our 100 dedicated investment professionals to ensure that we're seeing all the opportunities and allocating our capital to the most attractive ones. And as Wyatt will explain later in the presentation, we do this without ever getting away from the bedrock of our business, which is our balance sheet. Our uncompromising focus on our balance sheet ensures that we always have the liquidity available to pursue the largest and most attractive opportunities regardless of market conditions. And today, we have the highest credit rating in the sector, a record level of liquidity and no near-term maturities, positioning us very well for the growth runway we see ahead of us. And this approach has allowed us to increase our underlying cash flows at almost a 10% CAGR on a per unit basis over the last decade. And not only have we increased them, but over that time period, we've strengthened and diversified those cash flows. And as we look forward in our business today, we are confident that we can not only continue but also enhance that cash flow generation based on things that already exist within our business, notably, development projects that are fully funded and about to come online or revenue increases in contracts that either already exist or we've signed recently. This focus on underlying cash flows has allowed us to deliver high teens annual returns to our shareholders for over 2 decades while, at the same time, continuously increasing our distribution on an annual basis within our 5% to 9% target, a rate that -- a target that we remain committed to even while funding an ever-growing growth opportunity. But as mentioned, last year, we said the tailwinds were stronger than ever before, and we think we're in an even better position this year. And let's start with the macro. For years now, we have been saying that accelerating decarbonization trends and renewables positioned as the lowest cost form of electricity production are the major drivers that will drive growth in our sector. Last year, we added a third major driver, which is, for the first time in decades, we have highly visible increases in electricity demand coming [Audio Gap] global industries, like industry and transport that are going to electrify in order to decarbonize. That creates growing demand that renewables will support given its low-cost position. And then lastly, now there is a fourth driver for our business that is perhaps the largest and most impactful today, which is, over the last 12 months, energy security and energy independence has become a major priority for every government and region around the world. This is leading to the build-out of domestic energy generation capacity that is not reliant on imported foreign fuels. Today, corporations still are the largest driver of decarbonization. Within our own business and in the industry more broadly, we are seeing more demand for green power coming from new build renewable assets than there actually are available projects ready to be built. This has tipped the supply-demand imbalance in favor of market participants such as ourselves who have both the pipeline and the operating capabilities to bring those projects online, on time and on budget to support that growing corporate demand. Further, corporations around the world are increasingly looking for partners to either help them -- their own business or help them provide growing decarbonization solutions to the broader market. This again plays to Brookfield Renewable who can use its size, global reach and operating capabilities to be the partner of choice for corporations that either need an operating partner or a capital provider to reach their own decarbonization goals. But it's not just the corporates. Governments are increasingly throwing their support behind the build-out of renewables and other decarbonization solutions. If you look at the slide, in every one of our major markets around the world, in just the last 12 months, a significant policy or support program has been announced to accelerate the build-out of clean energy and decarbonization solutions and try and accelerate that transition to net zero. And what's important to remember from our perspective is, while our industry will benefit significantly from these new policies and support programs, we did not take them into account in any of our underwritings. And therefore, they represent upside for our existing assets and our recent investments. Renewables continue to hold that position as the lowest cost source of bulk electricity production in every major market around the world, a position they've held for years now. And that is why renewables are going to be the sector that capture that growing electricity demand in the future. But perhaps what's more important over the last 12 months is renewables have proven not only to be the cheapest form of bulk electricity but also the most stable because they are not subject to input costs that have become increasingly high and volatile over the last 12 months. And therefore, the economic benefits of renewables are stronger today than ever before. And then lastly, we get to the single biggest driver and the new driver, which is energy independence and energy security is a high priority for every major market around the world. And to put it very simply, renewables are the solution. In the Venn diagram of global objectives of net zero and low-cost energy and energy security, renewables are the complementary shaded area in the middle because you don't need to import the sun and you don't need to import the wind. And that is why governments around the world are working as hard as possible to accelerate the build-out of domestic generation. We've actually seen this happen before, not recently, but if you take yourselves back to the energy crisis of the 1970s when people were concerned about a shortage of imported fuels and high and volatile energy prices, what did it lead to? It led to a sustained build out of domestic generation that wasn't subject to foreign imports. At the time, that was a significant build-out of nuclear. We expect the exact same thing to happen today, except it won't be only nuclear but also wind and solar, all areas where Brookfield Renewable is well positioned to participate. But it's not only the macroeconomic trends that are stronger. Our business is incredibly stable and performs well in all market conditions. It's important to remind everyone that this is a real assets business that performs positively in an inflationary environment. As material and construction costs of new projects go up, these can be passed on to customers in the form of higher PPAs that are still at a significant discount to market energy prices. Further, within our existing business, the vast majority of our contracts are indexed to inflation, and our large and perpetual and scarce hydro portfolio is only increasing in value in the current market. And therefore, both the cash flows and value of our underlying businesses naturally increase during the current macroeconomic conditions. And this is because we offer a critical input to the global economy at the lowest cost. Because there is no input cost to renewables, green energy always sits at the top of the merit order. And that means we are not subject to short-term variability in electricity demand because everything we produce is consumed by the market. That's not going to change. Further, the production and consumption can be done at very, very stable profits because we are not subject to those volatile input costs that have dramatically changed the economics of thermal generation around the world. And what this means is despite the fact that we always talk about growth, our underlying business is performing very well and is backed by high-quality cash flows. These are long-term contracts with high-quality offtakes that are indexed to inflation. So even when markets are choppy and macroeconomics are a little bit uncertain, our cash flows remain stable and growing. And a point that was made earlier in those situations where markets are a little bit uncertain, the benefits of our global operating expertise really shine through. When there are small market disruptions, we call on our local development teams, our centralized procurement teams and our large customer relationships to ensure that we can continuously, despite what is happening in the market, deliver our projects on time and on budget without ever disrupting our growth trend. This has been an increasingly large differentiator for our business over the last 12 months. So when you put that all together, 2022 has been the strongest year ever for our business. We expect to deliver record profits, continuing our trend of double-digit FFO growth. Secondly, it's been our largest year for capital deployment into growth ever. In fact, if you look at the slide, we've deployed more capital into growth in the last 3 years than our entire history up to 2019. And what's most important is we've done that without compromising on our 12% to 15% return targets that have existed for 2 decades. We found those opportunities where we don't need to compete on cost of capital and we can leverage our size and our operating expertise to enhance our returns and derisk the investments we're making. But it's not just the scale of our investments. Not only have we deployed capital into our traditional asset classes, like operating hydro and wind and solar development. We've also made small initial investments into new growing decarbonization asset classes that we feel could be significant growth avenues for our business going forward. And lastly, our organic growth, our in-house development has hit an inflection point in the last 12 months. In the last year, we brought over -- brought online over 2,000 megawatts of new generation capacity that will deliver over $40 million of run rate FFO going forward. And this is really just getting started because for multiple years now, we have been investing highly accretive dollars into the ground at high teens to 20% development returns. And today, we have over 100,000 megawatts of development pipeline on a global basis. These represent very accretive growth options that we have at our disposable to pull forward when they provide attractive economics. And looking ahead over the next 3 years, based on the returns we're seeing within that portfolio, we expect to bring almost 12 gigawatts of new capacity online over the next 36 months. So now looking ahead. Going forward, our strategy is going to remain completely the same. But there's one point of context we like to provide, which is, last year, we suggested that our run rate deployment into growth would be somewhere between $1 billion and $1.2 billion per year on a run rate basis. And over the last 12 months, we've exceeded that level materially. And based on our pipeline today, we expect that level of growth to continue. And that is largely because we are seeing larger opportunities at very attractive risk-adjusted returns. And those opportunities largely fall in 3 different buckets. First is platforms. And what we mean by platforms is buying businesses that not only come with a very attractive portfolio of underlying assets but also a capable management team that we can empower and support to find their own value and create their own growth. These represent very attractive upfront initial investments but also future deployment opportunities as those management teams build out the existing development pipeline within those businesses. The second major type of investment is business transformations. What this is buying large power companies or supporting large power companies that need capital to transition to a more sustainable business model going forward. We view these as very attractive investments because we can also -- sorry, we can usually enter at a very attractive value entry point and by a cash-generative business that we can deploy further capital in over time to rationalize the thermal capacity and replace that capacity with low carbon renewables. And we can put that incremental capital in at very attractive returns by using things like the interconnection and the offtakes that already exist within those businesses. And then lastly, as Natalie will speak to shortly, we are increasingly seeing new decarbonization asset classes that are growing very rapidly that could represent large and attractive growth avenues for our business going forward. So putting that all together, this year, as we have in the past, we are again increasing our expected deployment targets into growth, now expecting to deploy between $6 billion and $7 plus billion over the next 5 years. In conclusion and before handing to Jay, we believe our business is in a better position than ever to execute in the current environment. Our visibility to double-digit cash flows is more certain than it's ever been in the past. And we believe that we are well positioned to maintain the elevated rate of growth that we've seen over the last 12 months. With that, I'll hand over to Jay.

Hi, everyone. So my name is Jehangir, and I'm the Chief Investment Officer of our renewable power business. We believe that growth in renewables is going to be tremendous over the next few decades. If this presents a very considerable investment opportunity and an area where we can deploy significant capital for the foreseeable future. The primary reason for this is clean energy is the first critical step in the transition to net zero. Over time, as more decompensation opportunities scale, we expect transition investments to grow within our portfolio. But investment in clean power generation remains the largest decarbonization investment opportunity today. We, therefore, are expected to represent the majority of our deployment for the foreseeable future. We see some incredibly strong tailwinds propelling the industry. Connor discussed these in detail. but they include corporate demand for green power is growing significantly as businesses increasingly adopt carbon reduction targets. Government support continues to be strong. For example, recently, the inflation Reduction Act was passed in the U.S. which significantly benefits renewable production. And today, renewables are the cheapest form for electricity production in many areas around the world. This is important because buyers of renewable power are primarily driven by economics instead of just green attributes. And lastly, as mentioned before, renewable assets provide government with energy security, which is critical in the current environment. The market needs far more renewables, meaning renewables are in the very early stages of their growth trajectory. We expect the next decade is going to see tremendous growth with capacity additions of over 1,000 gigawatts. This is over 4x the current deployment. And this will only increase over the next 30 years to achieve net zero. As storage further developed, renewables could be as much as 90% of the grid from 30% today. This is a very meaningful step change. Today, demand for power is growing for the first time in 30 years, and we think this is only going to accelerate due to electrification, which will be key to decarbonizing businesses. Over the next few decades, we believe many production processes will be replaced with electrification. We expect to see this in the C&I segment, which is the Commercial & Industrial segment, the residential segment and of course, the transportation, the quickly growing transportation segment. And this takes place through technologies like electric cars and buses, heat pumps and buildings and electric furnaces for steel. Renewables, given their low-cost position and zero carbon emission profile, are very well positioned for that growth. Renewable power portfolios are getting to greater scale and developers and offtakers are keen to work with strong, reliable partners that have the global presence and deep operating capabilities as we do. Investing in renewables is competitive, but we remain very differentiated in our approach. We focus on large-scale transactions where we can leverage our operating platform and our strategic advantages. We believe our track record, expertise in complex development and strong relationships with customers allows us to be the counterparty for choice for renewables investments. Our global renewable power platform is what gives us this leadership position. Today, we manage a highly diversified portfolio of renewable assets across 4 continents and 5 technologies. Our presence in all major power markets globally ensures that we see all potential growth opportunities. We have significant platforms in North America, South America, Europe and Asia. And this allows us to make acquisitions of scale in these regions. And now we've also executed sizable transactions across all major renewable sectors in the last 12 months. Examples of these, we'll talk about in some more details. Our greatest value is our multifaceted platform that operates across all major markets. We have 3,000 operating professionals around the world who help us execute on a broad range of opportunities. Our platform includes strong equipment procurement, PPA origination and power marketing capabilities, which significantly differentiates us and allows us to maximize value for investments. This means that we not only buy renewables but can develop, build and operate them, which gives us a very meaningful advantage in the market. Given our position as a partner of choice, we've established a diverse customer base with approximately 800 different customers across all types of offtakers, multiple global regions and all major renewable technologies. Our global reach, scale and various platforms allow us to generate consistent growth and be a reliable counterparty for renewable projects. When we think about underwriting deals, we can create a lot of additional value through our commercial expertise. In this current environment, counterparties often give us preferable terms because they value certainty of build and reliability. As a result, we're able to create strategic partnerships with some of the preeminent buyers of renewable energy. Some examples. With Amazon, we entered into a strategic collaboration agreement to develop renewable projects underpinned by PPAs from them. And with BASF, a multinational chemical company, we signed a 25-year fixed price renewable energy supply agreement to power one of its largest production facilities that it's building in China. Now we want to highlight how we have put all these capabilities into practice and leverage our strength to secure attractive investments and enhance operational value. As you can see, we've been able to significantly accelerate and enhance our development pipeline across regions and technology type. Our development pipeline currently stands at approximately 100 gigawatts, which is over 3x the size it was when we stood here last year. This pipeline includes many high-quality, high-returning projects that are valuable options for us to develop. We've also made a number of transactions exemplifying the strategy. And in particular, we've done so recently in the United States. We bought 3 large renewable development platforms, one across each of utility-scale solar, distributed generation and wind. This is 1.5 gigawatts of operating assets, nearly 50 gigawatts of development pipeline and nearly $3 billion of total investment, and it's expected to deliver 2 gigawatts of annual development on a run-rate basis. Urban Grid has significant transmission capacity in the highly constrained and valuable PJM market. Since buying the platform, we've been able to contract 1 gigawatt of projects with very strong PPA pricing. We also recently closed on the acquisition of Standard Solar. Standard Solar is a leader in distributed generation with close to 500 megawatts of operating and under construction assets and an exceptionally strong development pipeline and platform. And lastly, today, we announced the acquisition of Scout Clean Energy, which is primarily focused on wind development but also has quite a strong operating asset base and a very strong development team. All of these investments have a similar theme. They leverage Brookfield's value levers and, most importantly, our independent businesses that will find their own future growth and add their own value. We also think the timing of these investments is incredibly important. We underwrote these investments to attractive returns, but all 3 platforms will meaningfully benefit from the Inflation Reduction Act, which provides further upside to our investments. We are fortunate with these recent acquisitions. We are uniquely positioned to benefit from the act, making our growth prospects in the U.S. very significant. And overall, we expect these businesses and our platform to be well placed as renewable economics strengthened and the option set grows. To put it all together, we intend to continue to scale and grow our renewable investments globally. The next decade excites us, and we think it's going to be a very exciting time for the renewal business. So the technology continues to evolve, economics continue to strengthen, and we see the opportunity set growing very substantially in front of us. Our scale and platform allows us to create multiple levels for FFO growth and value creation. Thank you. Natalie will be up next.

Great. Thanks, Jay. As Jay and Connor have both already mentioned, renewables has always been and will always remain the backbone of our business. But for more than 5 years now, we've been diversifying our asset base. both into the new technology classes and renewables that you just heard Jay speak about, but also into new high-growth areas and asset classes like in the energy transition. Today, this segment of our business represents over 10% of our AUM. And as the need for decarbonization enabling infrastructure grows, the need for capital and, therefore, the potential investment universe also grows. As this universe grows, we expect that this segment, a percentage of bets over our overall portfolio will also continue to expand. Now having a decarbonization strategy in today's landscape no longer seems novel. But because this is something that we have been meaningfully -- we have been building towards for over 5 years, we benefit from having the largest transition franchise in the market today and the unrivaled first-mover advantage that comes with that. Now it starts, of course, with our renewable platform. Our global and diversified presence in renewable energy already gives us a clear leadership position. And now that we have BGTF, our $15 billion global transition fund, which today is the largest fund -- the largest global fund focused exclusively on decarbonization, we also have that leadership position. This allows us to capitalize on the ample opportunities that we're seeing in this space and continue to expand our portfolio into those newer asset classes like storage, hydrogen, biofuels and recycling. And the reason we're so well positioned to be successful is because we possess those 4 key attributes that you heard Connor speak about earlier in his presentation. We have global reach, large-scale and flexible capital, operating in clean energy expertise and investment expertise. We've got presence in over 20 countries, and we've built a deep team of over 3,000 operating professionals, over 100 investment professionals and a growing team of ESG and impact specialists to support on executing those decarbonization plans. And of course, to support all of this, we have scale and flexible access to capital, both through our public and our private vehicles, and all supported by a strong balance sheet and strong lending relationships. Our investment strategy and transition will be no different to what we apply in our renewable energy investments. We will stay laser-focused on high-quality assets and proven technologies, and we will -- which have strong cash flow visibility and downside protection, where we can exercise significant control and influence to generate value and grow those investments over time. As we do this, we will be able to deliver on real decarbonization benefits with no discount for financial returns because in decarbonization, value creation and ESG impact is indeed complementary. So how exactly are we putting this into practice and unlocking these opportunities in the energy transition? Well, it's simple. We leverage those long-standing corporate relationships that we've built across the Brookfield franchise to engage with corporates who are interested in decarbonizing their businesses. And then we leave with our advantage in renewable energy because every decarbonization plan starts with clean energy. Our first conversation with corporates is always around how we can leverage that PPA expertise that Jay just spoke about to offer those bespoke clean energy solutions to help address their Scope 2 emissions. Once we've established that relationship, we're then able to engage with them to understand their other changing energy needs as they're implementing solutions to reduce their Scope 1 emissions as well. Right now, we're having conversations with corporates who are looking to electrify their current processes or to implement low-carbon alternative fuels into their existing processes or install carbon capture equipment onto their existing machinery. Once we understand what those plans are, we can offer to either help fund those investments or to introduce them to our portfolio companies who possess the knowledge and expertise in those asset classes. And then we invest our capital into those solutions through those platforms. The result, we have attractive and bilateral opportunity sets with the ability to generate both strong returns and true additional decarbonization impact. And it's as we've grown this portfolio of transition asset classes that we have continued to establish ourselves as a one-stop shop for decarbonization solutions and really to cement our position as a trusted and preferred partner for corporates who are looking to decarbonize. Our investment strategy will take us where the emissions are. We want to invest in and alongside some of the economies hardest to abate but critical sectors like power, industrials, transport and energy. This could be through us buying a utility and then helping them to reduce their thermal emissions as we build out renewable energy production or we could partner with businesses across all sectors directly investing into their major emission reduction projects, which help them meet their own net zero goals. And in addition to helping to transform these heavy emissions businesses, we're also dedicating capital to scale the proven and low-carbon products and solutions that they will require in order to meet their net zero plans. This includes through investments into assets -- asset classes like carbon capture, hydrogen, renewable fuels and recycling solutions. And all of this will give that an enhanced opportunity set through which to continue to deliver on the historic growth that you've seen us deliver for the past 5 years. The opportunity set as we expand our portfolio into these areas is large. By 2030, annual investment into low-carbon solutions will need to reach $4 trillion of capital to scale these asset classes. Let me repeat that. That's $4 trillion annually. This will require creative funding solutions and significant capital to scale these asset classes as the technologies prove out and CapEx costs come down. In BGTF, we're already positioning ourselves to do exactly that through acquiring options, which will enable us to deploy significant capital as the preferred scaling partner of choice across a range of technologies as these assets develop over the coming years. We've already made a number of small initial investments totaling around $100 million. And while these initial investments are small, they're downside protected. And in exchange, we will get preferred rights to invest up to $5 billion of follow-on equity as those businesses develop and as projects are brought forward. This strategy has a number of appealing benefits to us. First, all of these opportunities give us discretion over deployment of follow-on equity on a project-by-project basis. This means that we'll be able to allocate our capital to the best sectors and the best technologies as these asset classes scale over time. Second, it gives us access to additional sourcing channels via our own partners and their business development efforts. This allows us to keep our investment teams lean and focused on identifying new large growth opportunities for our business over time. And third, it allows us to have a real impact in aiding the transition by bringing our contracting knowledge and our project financing expertise to help turn these technologies into the core stabilized infrastructure asset classes of the future. I want to finish today by briefly spotlighting how we're applying that strategy that I just talked about into the carbon capture space. This is a space where we've already made 2 investments each focus on 2 of the most attractive jurisdictions for carbon capture today. Canada and California. These investments, the first one being our partnership with CRC and the second one being our investment into [ ], are both structured in a way -- in such a way that gives Brookfield's strong downside protection, either via minimum equity returns at conversion were put rights. Furthermore, we have full discretion over future capital spend into follow-on projects. If those pipelines develop as planned, it will result in up to equity deployment opportunities over the fund life and bring online over 8 million tons of annual carbon capture capacity by 2030. In fact, we've already commissioned our first commercial-scale carbon capture asset in Alberta, Canada through our [ entropy ] investment, one which we expect will be the first of many. I'll end here for today, but I hope I've left you with the same feeling of excitement that we have about the scale of the opportunity and transition and, in particular, the substantial growth opportunity that this will have on BEP's portfolio over time. But of course, no growth is possible without a strong balance sheet. So with that, I'll bring up our last speaker for renewables, Wyatt, to talk about our financials.

Thank you, Natalie, and good afternoon, everyone. For those of you who don't know me, my name is Wyatt Hartley, and I'm the Chief Financial Officer of the Renewable Group here at Brookfield. And today, what I want to talk about is why in the environment that Connor, Jay and Natalie described, where the transition to net 0 is creating what could be the greatest commercial opportunity of our time, and where access to capital is becoming more challenging, why we believe more than ever that BEP is a must-own renewable stock. Last year, we highlighted 3 things that drive this. First, we have [Technical Difficulty] [Audio Gap] into Brookfield's $15 billion global transition fund as well as our participation in Brookfield's infrastructure funds, we have access to scale capital to invest alongside of us, which is increasingly beneficial in these markets. And as I mentioned, we will maintain access to flexible and diverse sources of capital to fund the growth of our business. As an example, looking back over the last 5 years, we funded the entirety of the $6 billion of equity capital we invested into growth without having to access the equity markets apart from our strategic share for share privatization of TerraForm Power. When we finance our business, our focus is to prudently source our lowest cost of capital. This means we maximize corporate debt, preferred equity and unutilized debt capacity across our existing assets but all while maintaining strong investment-grade ratings. Furthermore, we will continue to execute on our program of asset recycling, of selling mature, derisked, noncore assets to lower cost of capital buyers where demand for operating de-risked renewable projects remain strong even in the current environment and then redeploying those proceeds into higher-yielding opportunities. As I mentioned, we're accessing additional debt capacity across our existing business on an investment-grade basis. As an example, -- earlier this year, we signed a 40-year power purchase agreement at our Lièvre hydro facility with Hydro-Quebec. The contract was done at premium prices that are premium to the prices the facility had historically achieved, generating $20 million of additional revenue. But more importantly for us, given the duration of the contract, and the quality of the counterparty, we raised an additional almost $1 billion of 40-year fixed rate investment-grade debt. and we substantially redeployed that capital into growth at our target returns, which is expected to generate over $100 million of annual net FFO for our business. Said differently, through the recontracting and upfinancing of this one hydro, [Audio Gap] we funded the majority of our equity deployment this year at very attractive rates. Furthermore, with approximately 5,500 gigawatt hours of generation available for recontracting across our portfolio over the next 5 years and an increasingly constructive pricing environment for hydros, we have significant capacity to execute on similar contracts that we expect to contribute additional FFO as well as generating a highly accretive funding source for our growth. All of this means that we have a differentiated cost of capital. This comes from our ability to access additional investment-grade debt capacity across our hydros as I just mentioned. It comes from executing on our capital recycling program. But it also comes from the fact that we maintain our strong investment-grade rating, meaning our corporate financings are not reliant on the high-yield markets. which have seen a meaningful cost increase as well as the fact that we are not relying on equity issuances, except to the extent we do large strategic transactions, all of which translates to a very meaningful cost of capital advantage for our business. And when we are putting this capital to work at target equity returns of 12% to 15%, the benefit of building long-term value to our shareholders is very meaningful. Moving next to the quality of our cash flows, and I covered this a little bit last year, but to quickly remind everyone, we believe we generate the highest quality cash flows in the sector. This comes from our largely perpetual and dispatchable asset base, our highly contracted profile that has an average duration of 14 years with 70% of our revenues indexed to inflation as well as our high margins, given we have little to no input costs, meaning our cash flows benefit in an inflationary environment. And finally, we have very little exposure to floating rate debt. And as we have grown the business, we have also significantly de-risked our cash flows by increasing the diversity of our portfolio. Our current business is diversified across multiple markets and technologies such that no single market represents more than 10% of our business. Furthermore, as Jay mentioned, we continue to be focused on maintaining a high-quality customer base with over 800 investment-grade customers under long-term contract, meaning our largest nongovernment third-party customer represents less than 3% of our generation. And finally, as a result, we have no material foreign exchange exposures. And as a result of all this, we are well positioned to continue to deliver on our decade-long track record of annual FFO per unit growth of greater than 10%. As we have highlighted previously, we have multiple levers to drive our cash flow growth, both organic and M&A. And as Connor mentioned, in the current environment, we are seeing meaningful tailwinds for each of our growth levers. Meaning the cash flow growth of our business is increasingly secure. And while we believe there is a strong likelihood of outperforming to the extent we benefit from additional M&A and development activities, we have effectively secured a large share of our target FFO per unit growth over the next 5 years without the need for additional capital. And this comes from 3 basic building blocks. The first is inflation, which, given, as I said earlier, that almost 70% of our revenues are indexed to inflation, and given we generate high margins and we use almost exclusively fixed-rate debt, our cash flows benefit from an inflationary environment. And therefore, we expect to generate a minimum 2% annual FFO per unit growth over the next 5 years with material upside if we are in a period of prolonged higher inflation. And from a margin enhancement perspective, -- we're also well positioned to benefit from increased demand for baseload carbon-free generation. The way to think about this is that over the next 5 years, and I mentioned this earlier, we have approximately 5,500 gigawatt hours of generation that is rolling off contracts. And if we were to recontract this generation at current all-in market prices on a forward basis, which includes the grid stabilizing services and renewable energy credits that we sell from our dispatchable hydros. The net impact to our cash flows will be positive, generating over $130 million of annual FFO or 3% annual FFO per unit growth over the next 5 years. And finally, I think this is probably the piece that is most underappreciated about our business. is how the development dollars we have in the ground or projects that are in an advanced stage of development, meaning they are substantially derisked and funded will translate to FFO in the next few years. Looking at the detail, we have close to 6,000 megawatts of projects where our development dollars are substantially in the ground and are expected to deliver $80 million of annual FFO when commissioned. Further, we have an additional over 6,000 megawatts of advanced stage development projects that have been materially derisked and for which we have secured substantially all the required funding. These projects are expected to generate $85 million of annual FFO and commissions. Meaning between these 2 buckets alone, we have substantially derisked 3% annual FFO per unit growth over the next 5 years. And as Jay and Connor touched on, our development activities are increasing, and we now have an additional almost 90,000 megawatts of potential development projects that are well diversified across regions and technologies that provide a significant runway for growth that we can pursue provided the market environment supports it. which we are confident that it will. So bringing this all together, looking over the next 5 years, we have effectively secured almost 10% FFO per unit growth. And with the additional tailwinds in our business, we are highly confident that all roads lead to growth at our most historic rate. So with that, I'll turn it back to Connor for concluding remarks and Q&A.

Great. So quickly in conclusion and at risk of reading the slide, there's 4 or 5 takeaways we'd like to leave everyone with. First and foremost, the tailwinds for our business continue to accelerate and are now stronger today than ever before, and the current environment plays very well to the strengths that are inherent and unique to our business. This leads us to have a highly visible path to cash flow increases in the coming years. And based on our growth pipeline, both organic and M&A, we expect our recent elevated pace of growth to continue in the near term. And lastly, we do all of this without ever compromising on our 12% to 15% return targets and without ever compromising on the attractive risk-adjusted returns we seek for our capital. With that, we'd like to thank everyone for watching today's presentation, and we'd welcome any questions from the audience.

Andrew Kuske, Credit Suisse. Connor, if you look out 5 or 10 years, how do you think about the composition of Brookfield Renewable. And we've spent a little bit of Bruce's comments earlier on with Mark. There was a point that wind wasn't economic. You really had no exposure. Solar was an economic. You really had no exposure. Now you've got meaningful exposure in both those verticals. So how do you think about CCS hydrogen? And then what does that mean for the face of Brookfield Renewable as it is now?

Absolutely. Great question. Without question, the majority of the dollars we are still putting to work today are in the core asset classes that we've been investing in for decades, hydro, wind, solar. So to your question, looking out 10 years. Those are going to continue to be the dominant asset classes in our portfolio. But absolutely reinforcing what Natalie said, the energy transition and decarbonization solutions component while it might be just shy of 10% today, we do expect that to grow, but renewables are still going to be the dominant majority. I would expect at least 70%, 75% plus for the short to medium term.

Okay. That's helpful. And then just maybe as a follow-up, do you have an incubation strategy for certain businesses. Like CCS is a good example where potential is large, very large, but it's really in the early stages of things. When do you step in really early stage, grow it and then spin it off? Or do you stick around for the longer term?

Certainly. So we approach CCS, the exact same way we approach wind and solar 5 or 10 years ago. We are investing in these asset classes because we expect them to grow materially over the coming decade. And while we may sell individual assets within, let's say, our carbon capture portfolio, we expect to be a consistent and major player in that space and always will retain the platform from which we can either buy assets or develop assets in-house. So the same way we've treated wind and solar, we may recycle individual assets, but these asset classes that we've entered, we expect to maintain our exposure to in perpetuity.

It's Ben Pham, BMO Capital Markets. I'm listening to the comments, Connor and a very robust outlook. Development backlogs tripled since last year. You have energy transition. So when you think about the energy or the equity deployment targets, I would have thought it's been a much bigger bump, 1.5. Maybe 2 is a bit of a stretch green sky's scenarios. Are you maybe excluding M&A and that outlook? I'm just a little bit underwhelmed by how much the targets have gone up. Just listening to other commentary.

Fair enough. So I would reference 2 things. One, last year, our target was a little bit lower, 1 to 1.2, and we've deployed about 2 in the last 12 months. And based on our near-term pipeline, both organic and inorganic, we expect that elevated rate of deployment to continue in the near term. But really what drives whether or not it's going to be at 2 or 1.5 are some of the larger-scale deals that we are increasingly seeing. And if we do more of those, we're going to be above our targets, there's no question, but those are large and chunky transactions, and they don't always come to fruition. There are certainly a couple in our pipeline today that, if we do execute, will push us above our run rate.

Understood. And then follow-up, the costs, 6% in the last couple of years, is it more friction to that 6.5%, 7% now with rising interest rates?

Certainly. So there's a really interesting dynamic going on in the financial markets right now, which is there continues to be very, very robust liquidity and deep access to lending markets for renewables and infrastructure and high-quality assets. So while underlying rates have increased substantially, we're actually seeing spreads hold constant. And therefore, we haven't seen rates move too much for our project level financing. So while if interest rates continue to rise, those numbers might free up creep up a little bit. We don't expect them to have a material impact on our broader financing strategy.

Rob Hope, Scotiabank. Just to follow up on Ben's question there. You mentioned that you're seeing a number of large opportunities in the pipeline. If we look back over the last 12 months, you've been very successful in a number of acquisitions, but we'll call them not necessarily operating assets. There'll be a little bit of operating but a large development backlog there. So when you look forward and just given the scale of capital that's chasing all these opportunities, do you need that development kicker to compete? Or do you need some other form of differentiation to set your returns apart from your peers?

So if we were to look at our deployment over the last 12 months, what's interesting is we exercised the same capital discipline in all market environments. And if you go back to last year, we put a lot of pucks on that and didn't score as many goals as we would have liked. And I think that's because markets were very, very frothy. Everyone had unlimited access to capital, and there was an absolute gold rush of money into renewables. Now you fast forward to this year, and using the exact same capital discipline and approach to underwriting, we're having a much higher shooting percentage. And the fact that things -- that a number of the transactions we've done this year are development, that's purely opportunistic. Especially in the current market environment, I think our access to capital significantly differentiates us, and we could see many opportunities to buy operating assets at attractive returns in the next 12 months.

Mark Jarvin from CIBC. So Connor, you mentioned the shooting percentage has gone up because competition for assets has maybe moderated a little bit. If you flip that around, how does that look for the asset sales? It looks like that as the funding mix has come down a little bit. And then maybe you can expand on the strategic prioritization and how you came up with that number and the funding mix and whether or not privates are open to that as well as just public companies.

Definitely. So when it comes to capital recycling, it's important to recognize what we do in our business. We buy businesses that we think we can derisk better than anyone else. And that's how we can buy for value at attractive returns. And then through our operating plans, simplify those businesses such that they can be sold to someone with a lower cost of capital. And that margin compression between where we buy and where we can sell our mature businesses that are at the end of our business plan is still very, very significant. And we're not really seeing too much compression of that margin. And therefore, capital recycling is still very attractive and a big part of our funding plans going forward. Secondly, to your question around using our equity as a currency for a potential large transaction, we will consider it but only when it's highly accretive and strategic to our business. We did it most recently with the privatization of TERP. If we saw another transaction that was both that accretive and not beneficial to the growth of our platform, we would absolutely consider it. I think we are running out of time here. Maybe one last question very quickly.

Ben Butler, Veritas Investment Research. You guys are forecasting power prices in North America to be $77 per megawatt hour over the next decade. I'm just curious how this compares to your more recent PPA with -- 40-year PPA with Hydro-Quebec that you recently signed.

Certainly. So power prices have gone up significantly. And there's certainly a difference between when you contract a 40-year PPA versus what power prices are going to be in the short term, which are much more driven by things like near-term gas prices. What we would say is we are coming out of an extended period of very low power prices to ones that are much more constructive for our business over the long term. And we will take advantage of that. As Wyatt mentioned, we have a significant amount of uncontracted capacity. We are continuously locking that in, which means not only are we going to reap the benefits of those higher power prices this year, we're locking in those higher power prices for the short to medium term. So we'll enjoy those benefits for several years to come. Thank you very much. We appreciate everyone's time.

Thank you, everyone. Good afternoon. Thank you for joining us today at our Investor Day for Brookfield Business Partners. Presenting with me today is Anuj Ranjan, the President of Brookfield Business Partners. He oversees our European, Middle East and Asian business. Anuj is going to talk about the opportunities we see today, and there are many in the environment we're operating. We're also joined today by Teresa Vernaglia, the CEO of BRK Ambiental, our water and wastewater operations in Brazil. And Teresa is going to talk about our progress at BRK Ambiental. And our CFO, Jaspreet Dehl, is going to wrap up our presentation, speaking to you about our financial progress. Our strategy is simple. We buy great businesses for value. We enhanced the profitability of those operations and we monetize them when we can maximize value. And since we talked to you last year, we've made excellent progress in executing our strategy and continue to generate increased value. We invested $4 billion at BBU share to acquire super high-quality large-scale businesses. We generated $1 billion of distributions from our operations. We achieved record financial performance by every measure, and we completed the creation of Brookfield Business Corporation, which provides investors another option to invest in our business. We're really pleased to maintain our track record of strong growth and performance. Our adjusted EBITDA, which is BBU's share of the operations we own, has increased at a 50% compound growth rate since we created BBU to more than $2 billion today. Adjusted earnings from operations, or EFO, which includes interest expense and taxes, has increased to $1.3 billion. And most importantly, we've increased performance on a per unit basis with EFO per unit growing at 30%. Now this reflects the growing cash flow from our operations and a couple of equity issuances we along the way to support our growth. Now in addition to growing the profile of our overall business has continued to get stronger, we've sold many of our smaller, more cyclical businesses. We reinvested those proceeds to acquire larger and really high-quality businesses. And today, our high-quality operations are serving us really well. For those of you that were here earlier, you would have heard Mark Carney talk about resilience. And this is the reason resilience is so important in our business. Like most businesses around the world, we've been navigating through a challenging operating environment. We've had inflation in the form of higher material, labor and energy costs. Supply chain challenges are starting to ease in some areas, but they are -- overall, they remain stretched today, and manufacturing lead times are well above normal levels. In response, central banks around the world are tightening monetary policy. Interest rates are increasing, and this is, of course, dampening global growth. But despite these challenges, our operations have remained very resilient. And in fact, our EBITDA margins are actually improving. Now this is happening for a couple of reasons. First, we own global, market-leading companies with high-quality operations, selling essential products and services. Our businesses include the global leader in advanced automotive batteries. 2/3 of its profitability comes from recurring aftermarket sales. We own a leading water and wastewater service provider in Brazil, providing 16 million people with an essential service. Teresa is going to give you some insight into that. And we own the leading European modular space provider with a fleet of 260,000 modular units. Quite simply, BBU's operations provide products and services that consumers and businesses need to buy in any environment. Now the second reason our margin performance is improving is because we continue making progress on our operational plans. We have built an organization focused on repeatable processes to drive improvement in any sector we're in and in any region. When we buy a company, we have a very detailed plan on what we're going to do to it and how we're going to drive margin improvement and cash flow. And then we take a very hands-on approach to managing those businesses. And to that point, the annual EBITDA of the 15 businesses we've acquired over the last 5 years has improved in total by $750 million. BBU's share of that is $275 million, so very meaningful value improvement. And the combination of owning these high-quality businesses, combined with our operations plans, is driving performance. On a same-store basis, our revenue was up 5% over last year and EBITDA is up 7%. And what that means is our operations continue to generate increasing levels of cash flow. Jaspreet will give you a greater sense of that when she goes into her section. So I thought I'd talk a little bit about the great businesses we recently added. These acquisitions are in different industries, but they all share the same characteristics, which we really like, leading industry positions, durable competitive advantages, strong returns on cash flow and strong cash generation. At our share, these businesses added close to $700 million of EBITDA. And I thought I'd highlight a couple of them, starting with Scientific Games. Scientific Games is our lottery service provider, which we acquired in April. This business provides services and technologies that governments need to run lottery programs. Lotteries are a critical source of funding for governments. In the U.S. alone, they generate over $100 billion of revenue. And proceeds from these lottery programs fund very important social initiatives, including health care, education and senior services. Now what you can see on this slide is the incredible resilience of this industry through all economic conditions across multiple decades, and we love industries with this type of backdrop. Now our view is that with increasing budget deficits, governments are probably going to rely even more on lotteries. And Scientific Games is the market leader, partners with 130 lottery programs across 20 countries. We plan to support the growth of this business, both by enhancing the offerings to its customers and helping it grow internationally using our global footprint. In addition, digital lotteries are just getting started, and this should drive meaningful growth. So over the next several years, we think we should be able to increase the EBITDA of this business by about $150 million per year. In July, we acquired CDK Global, the market leader of software and services to auto dealers in the U.S. with 50% market share. CDK provides mission-critical ERP software. It has almost 100% retention rate amongst its larger customers. It has a subscription-based software model with recurring contracted revenues, very low ongoing capital requirements, all of which means it generates a lot of cash flow. Even then, we see a big opportunity to make it a better business. In fact, we see similarities to our Westinghouse investment. CDK's margins have been going in the wrong direction. And it operates in an industry that's misunderstood. And both of these gave us an opportunity to buy a great business at a reasonable value. Historically, this business generated EBITDA margins of around 44% and recently declined to 31%. You're going to ask why, of course. Well, they added a bunch of costs. They focused on products and services that the market didn't want. Our plan is pretty simple. It's to improve productivity, enhance customer service, sell the products that the customers want, and we're going to focus on the same areas we did with Westinghouse: organizational design, commercial execution, product delivery. CDK's margins should improve very meaningfully over time. So hopefully, you will agree that we're adding more great businesses to BBU. Today, about 75% of our annual EBITDA comes from really high-quality, market-leading businesses. The durability of these businesses will continue to support stable financial performance across market cycles, and our earnings should continue to grow as we execute on our value creation plans. Now at the same time, we're moving forward with our next monetization cycle, which will crystallize meaningful liquidity for our business. So when is the right time to sell a business? We get asked this question regularly. Well, it depends on how far along we've progressed in our value creation plans and obviously, market conditions. Westinghouse, our Nuclear Technology Services business is well progressed, and the industry is set to have strong tailwinds for the foreseeable future. So as many of you will know, we're running a sale process for Westinghouse. Since acquiring Westinghouse in 2018, we enhanced the value proposition for its customers. We improved productivity. We invested in technology with 7 bolt-on acquisitions. Annual EBITDA of Westinghouse will have almost doubled by the end of this year from the time we purchased it. And so far, we have generated 2x our invested capital from distributions. And we -- obviously, we expect to generate meaningful proceeds from an eventual sale, which will fund our future growth. Westinghouse is really just a precursor of what's to come. Many of you would know, we've been very acquisitive over the last several years. I just want to put that at what that really means in the context. In the last 2 years alone, we've invested $5.5 billion into mostly larger, high-quality businesses. Now on balance, if we're able to achieve even the low end of our targeted return range, our target return range is 15% to 20%. But if we can achieve 15% over a 60 -- year hold period, we should generate more than $12 billion when it comes time to sell these businesses. So our next stage of capital recycling sets us up really well to fund future growth. So with that, I'm going to hand it off to Anuj, and he can tell you how we intend to invest all that money.

Thank you, Cyrus. So I'm here to speak with you today about how we plan to invest that capital in an uncertain time, which has never been more apparent than the environment we're in today. So first, to start with, we are today a global business. We have about 160 investment team members all over the world, supported by 90,000 operating employees in every single region we operate. And what that gives us is deep industry knowledge to each of those local markets as well as a pulse on the market, which not only allows us to manage our assets across all of these various geographies, but it also helps us generate significant proprietary deal flow. And this is entirely by design. We've been investing in growing our presence outside of North America over the last several years. We now have offices outside of North America in London, Frankfurt, Madrid, Sao Paulo, Mumbai, Dubai, Sydney, and more recent operations as well in Shanghai and Tokyo, where we have real boots on the ground and local expertise. We've also been investing capital in all of these markets outside of the Americas. About 3 years ago, we acquired a business called Healthscope, a leading health care services provider and hospital owner in Australia. More recently, about a year ago, we made our largest acquisition ever outside of North America with Modulaire. Modulaire is a leading modular leasing and workspace accommodation services provider in Europe, 4x bigger than its next biggest competitor, and with a presence in 25 countries. And in the last year, we've made 3 more modest investments in Asia, in India, the UAE and also out of Singapore, buying businesses in financial and technology services, some of which I'll speak a bit more about later. Now despite what you read in the media and despite what the markets are doing, especially on a day like today, there has never been a better time to be a global value investor. The world looks very different than it did a year ago. You've had a decade of disinflation now being reversed with the inflationary pressures that we all know about, especially in the wage market and energy market. You also have interest rates. While they are low from a historical 40-year perspective, they're increasing as central banks tighten the monetary supply. And this is what is helping create the opportunity. Valuations have compressed across all regions and all markets more dramatically in Europe and the emerging markets. And for us, as a value investor, this creates a real opportunity, especially if one has a broad investment mandate as we do. We have the flexibility to invest in many different ways, as you can see. We prefer control investments, what you know us for, which is buyouts of high-quality, large leading businesses, where we have scale and we can employ an operational approach, but we also have the ability to do strategic noncontrol investments, structured investments, preferred securities, common equity even or mezzanine financing and debt financing where we can be a great partner to other businesses that need capital. And this allows us to surface opportunities from a variety of sources. In an environment like today, you have large multinationals and conglomerates that are now retreating back to their core businesses and selling noncore assets and businesses. You have often misunderstood or orphaned public companies that are trading well off and don't have access to capital, providing a real opportunity. Many corporates need capital to deleverage or they might need capital for growth. And today, the equity and increasingly, the debt markets are no longer available to them. In addition, you have companies that sometimes are forced to sell businesses, whether it's due to a regulatory reason, or sponsors that sell businesses due to end-of-life fund periods. And it's on that note that I'll speak with you a bit about Unidas, a leading fleet Brazilian fleet management business, which we acquired last year that has doubled our presence and our fleet management under control in the country. And we were able to acquire this business opportunistically for value because the prior owner needed to sell it when the government forced the sale due to antitrust issues. And it's an opportunity like that, that allows us to put -- to double the size of our existing business, but it gives us a ton of scale and a lot of opportunity to continue to grow the combined entity. Looking ahead, we're very excited about the future and about delivering further growth for BBU in this rapidly changing and evolving environment. There are many secular trends that are impacting everything that we do, businesses we own and sectors that we're looking at. Inflation, which we heard a lot about this morning, of course, is a key driver, and it's increasing the need to have pricing power in your businesses, leading market businesses like the ones we own. Many industries are investing more heavily in technology and enterprise solutions or services to combat this inflation through digitization because that acts as a great inflation offset. You have energy security, which both Mark and Connor spoke about earlier. And that is creating a need for new infrastructure, which creates another need for infrastructure services, the kind that we own and invest in today. And sustainability continues to be a tailwind, both at a financial level and at a government policy level across everything we do, again, creating the need for other services in the space. You also have demographics, an aging population in the West and a younger emerging population in the East, where the middle class and the wealth is growing. We have different demands for services and products. These trends align around our core sectors, industrials, infrastructure services and business services. In the supply chain, we have -- as was heard -- you heard earlier, the re-onshoring to the U.S. has increased 50% in the last 3 years, and that's a trend that we can benefit from and invest around. At the same time, you have urbanization. 2.5 billion people expect to live in cities by 2050. And that's a huge demand on infrastructure, creating more need for services that support that infrastructure. And business services, if you take outsourcing, in a recessionary environment like we're in today, with wage pressure, you're seeing increased demand for business process outsourcing services. And I'd also like to speak with you a bit more detail about technology in health care, 2 sectors where we've been building capability over the last several years, and we see a real opportunity in this environment. First is technology is an incredible inflation offset. And that's important in this environment where inflation is on everyone's mind because when companies use enterprise software or services, it allows them to be more productive and more efficient directly combating the impact of inflation and, in fact, as you can see here, often going beyond the impact of inflation. Now while technology services and software are a great opportunity to combat inflation, as you can see, the NASDAQ has been dragging down. The tech companies have been beaten up in the stock market. In fact, this chart is a few days or, if it was today, it probably had fallen off the slide. The opportunity as a result of this is quite incredible because we are actually thankful that tech is viewed as that high-growth consumer unprofitable tech that we all think of. I think some 85% or 90% of the market of unprofitable tech companies of the market cap of these things are unprofitable tech companies. But with that comes some great technology companies as well. It really is a tale of 2 cities and not all technology is created equal. You have your high growth, lower no profitable tech where valuations, even after coming off, are still incredibly high. But with that, are actually great businesses that are profitable, cash-generating, high-quality technology services and software companies that trade at much more reasonable multiple and are being unfortunately dragged down in this environment, businesses like CDK, which Cyrus spoke about earlier. Another example of a great business that fits that category that we were recently able to acquire is Magnati this is a technology-enabled payment processor in the UAE is an [ oligolistic ] market where Magnati has 1/3 of the entire market share of online and off-line credit card transactions. And so in an environment where the UAE is still 50% cash, 50% credit, the shift, the secular trend and the shift to credit card or bank card usage is increasing, and the country itself is growing, providing significant tailwinds for this company. We have been able to buy this technology company and also put in place an expansion plan in the region. We're also seeing amazing opportunities in health care. And I want to tell you a little bit about this because, as you know, we've been building our capability in health care over the last few years. But in this specific environment, it's actually quite interesting. First is we have to set health care in terms of the scale of the entire business. Health care spend, global health care spend last year was $8.5 trillion. It's a massive industry. Half of that spend was in the U.S. alone. Now notwithstanding the size of the sector, the activity in the space, whether it's through IPOs, SPAC or private equity activity is down between 40% and 80%. Even with the activity down, though, health care as an industry continues to perform quite well. The growth in health care spend is expected to be about 3x U.S. GDP growth. And you have a great -- you have still a very robust and resilient market that's been hit now by a very difficult environment over the pandemic. It's been through what I'd like to refer to as a triple whammy. You've had the start of the pandemic where you couldn't have elective procedures due to hospitals being shut or being used for COVID requirements. You've had the more recent supply chain disruption, which has affected all of these kinds of industries in the world, including health care. And more recently, you have inflation and labor shortage. And so you have a sector that's very resilient. It's been hurt in the last couple of years, the scale of which is huge. We happen to have built out a capability in this space very recently, and it provides an opportunity but only if you have the ability to operationally turn around these businesses. And that's why we are focusing on the parts of health care that we understand where we can add real value. Industrial health care, medical product manufacturing, think of a business that makes pacemakers, high-quality sort of manufacturing that we want to do, this is an area where our expertise in logistics in supply chain and distribution is going to help us invest. You also have health care business services providing very specific services that require health care knowledge 2 hospitals or 2 health care providers, insurance plans. Again, an area we know a lot about from our experience in business services. And the physical delivery of care, where we're focused on lowering the cost and increasing the quality of that care, so think of providing health care in the home a much lower cost advantage, again, another interesting opportunity in the space. Now I've said a lot over the last 15 minutes. And so if I had to leave you with just 3 things from this presentation, it would be this. Number one is we're very excited about the future. It's a great time to be a value investor. Number two is, we have built out our global scale and capabilities over the last several years. And three, is that positions us very, very well in this uncertain and somewhat volatile economic market. Thank you. And with that, I'll hand over to my colleague, Teresa.

BRK Ambiental is a leading private water company in Brazil and was acquired by Brookfield in 2017 for approximately $1.7 billion serving more than 16 million people in 13 states. The business provides critical water and an patient services through exclusive multi-decade contracts. Currently, around half of Brazilians don't have sewage collection in their homes. We are helping to change that and to change Brazil. It is estimated that every real invested in sanitation and water supply contributes BRL 5.20 of economic benefits in Brazil through reduced health care and other costs. We have put in place a new senior management team, enhanced controls and rebranded the business. BRK Ambiental is committed to long-term growth, and we'll continue to invest to expand access to quality water and sewage collection and treatment.

So good afternoon. I am Teresa Vernaglia. And I have been CEO of BRK Ambiental since Brookfield acquired this business in 2017. We are one of the largest water and wastewater service provider, serving 16 million inhabitants. And since we bought this business, we are growing BRK substantially. -- io is strengthening the management team and improving the quality of service. And what is amazing about this business is that this growth is a sustainable growth as we have the ESG embedded in our core business, and I'm going to explain in the coming slides. And also amazing about this business is our future growth. And why Brazil has amazing gap to provide this basic service to our population. Today, 35 million Brazilians do not have access to potable water, it's the entire population of Canada, and 0.5% without access to sewage collection and treatment. In 2020, the Brazilian Congress approved a new legislation establishing to the country reach universalization, 99% of portable water and 90% to collection and treatment of sewage. $100 billion of investments needed to be done, and the BRK is a strategic position to capture this amazing investment opportunity. The reason for that is our national footprint. We have providing service over 100 municipals all over Brazil. In 13 states, we have a unique opportunity to leverage in gain of scale and synergy while we are delivering a strong track record of results led by a proven team. And this is a basic service, a basic business. We provide water and sewage to population. At the end of the day, we are providing health and well-being for population. While we get paid through a long-term contract, all of which with a tariff increase annually by inflation and year after year, improving the operational efficiency under a regulatory environment that's become a mature every year. And we are building a very successful story. What we have done, what this management have done in the last 5 years results in an increase of 35% in EBITDA while improving the EBITDA margin from 30%, 80% to 45%. And what's more amazing about that? It's a business that grows double digits with a sustainable growth. BRK meets 10 of the sustainable development growth of UN. And since 2017, we have strong commitments and the clear goals to reach even more this agenda. And this sustainable growth of 2 digits -- with a strong track record of results is the base of this business that has a stable, predictable and growing cash generation. A concession goes through 3 stages: under development, ramp-up and maturing stage. 2/3 of our concessions are under the high-growth phase under development and ramp up. It means CapEx intensive to connect the new households, increasing the customer database and our revenue, increasing our operational efficiency. And as we are reaching the universalization, the assets become mature. At this stage, the CapEx goes down and EBITDA normalized at 70%. And this is the basis of this business. We do this over and over again in each one of these assets, and we call it, do it, improve it and repeat it. Our existing portfolio -- in our existing portfolio, we are serving 3.1 million households. As our portfolio is getting mature, we are going to add 1.6 million households. Each one generates an average $150 net operational revenue per year with an EBITDA margin of 70%. And this shows to us what is to come in terms of growth for this company within the existing portfolio. And the way that we guarantee this growth is based in 3 pillars: our ability to perform the CapEx execution, capital allocation, connecting customers to reach universalization, keep improving our operational performance and also revenue management, improving delinquency rate, meter replacement and customer database optimization. And that's exactly what we did when we add value, not only growing the existing portfolio but adding new concessions to our platform. That's what happened in 2020 when BRK won a bid, adding to our current business, a new state, 13 municipalities and 1.5 million in [indiscernible]. Our commitment in this concession is to reach universalization of water that today is around 80% to 90%, 90% by 2027; universalization of sewage by 2033 and reduced the water losses of amazing 60% to 25% in the coming 80 years. We are very excited about the coming years of BRK as we are keeping growing this company double digits in an organic basis but we are also very excited about what we have what we have to come. Since the approval of this new law, we have a pipeline ready to come to the market that represents right now 6x BRK population. And most of these projects, most of the pipe are concessions in the Northeast of Brazil, where BRK has most of our current concessions, gain of scale, synergy, strong track record of execution. The sky is the limit for this company with a double-digit growth, but what's more amazing about that with sustainable growth, providing health and well-being for the Brazilian population. So thank you for your time. And now I pass to Jaspreet.

Thanks, Teresa, and good afternoon, everyone. I usually end my presentation every year with NAV or our view on liquidation now. This year, I thought I'd mix things up, make sure people are paying attention and start with the NAV. Our overall objective at BBU remains unchanged. We're very focused on building intrinsic value within the business over the long term. Since we've launched BBU, we've grown net asset per unit by a 15% compounded annual growth rate to approximately $39 per unit today. But many of you who track our units also know that our market performance has been below the value that we've built at BBU. In our view, this disconnect is driven by a few misperceptions around the business. The first is around the underlying quality of our earnings. Cyrus highlighted the strong growing margins that we're generating today, which are underpinned by high-quality, large-scale operations that are providers of essential products and services. This gives the business a tremendous amount of ability to grow earnings and cash flows. I'm going to focus on the other 2 things that we perceive are misperceptions in the market. The first is the management of our balance sheet and the second is the trading potential of our units. Starting with our balance sheet. Our goal at BBU continues to be to have no permanent debt at the corporate level. We do have working capital lines, which we've drawn on to fund acquisition activity but we view these as bridge capital to monetizations, and they are not meant to be permanent in nature. We finance all of our operations within our operating companies on a nonrecourse basis. So no recourse up to BBU, no guarantees and no cross-collateralization of that debt across the different operating companies. And lastly, our goal is to ensure that the debt that we put in place within our companies is serviceable and sustainable. Serviceability of debt really comes down to ensuring that in all market conditions, our operating companies can cover the interest payments related to the debt as well as refinance the debt as it comes up. Sustainability of debt is ensuring that as we get closer to monetization, the level of debt within the operation is sustainable or suitable for the long term. Now, this can look quite different for different businesses. What's appropriate for a particular operating company within BBU may not be appropriate for another. And when we're making a decision around what's the right amount of leverage to put on new business, there's a few things that we take into consideration. The first is the underlying characteristics of the business that we're buying or financing. Is the business a market leader? Does it generate stable cash flows, even contractual cash flows? Or is it a business that may have variability or volatility in the underlying earnings or cash flow profile? Second, what are we planning to do with this business? What's the EBITDA-enhancement potential? Where are we in our value-creation plan? And is that going to result in a natural deleveraging of the balance sheet? And finally, what is the long-term optimal capital structure for that particular operating company? So let's look at that within the context of BBU's operating businesses. Starting with Multiplex, our construction operations. We've owned this business for a really long time. Revenues and earnings within the construction operations can vary based on timing of customer awards as well as the project activity that's ongoing, and this can lead to variability both in earnings as well as the cash flow generation within the business on a quarter-over-quarter basis. In businesses like these, we'll typically minimize the amount of leverage that we put in place. For Multiplex, in particular, we run that business with no permanent debt. In fact, we run it with cash on its balance sheet. At any point in time, Multiplex will have excess cash, which allows it to manage through any variability in ongoing quarter-over-quarter cash flows. On the other hand, we have businesses that are stable, long-term cash flow generating and can sustain higher levels of leverage. Westinghouse, our nuclear technology services operation, is a great example of that. It's an extremely resilient business with a sticky customer base and generates a lot of free cash flow. We bought this business in 2018, and when we bought it, we funded it with $1 billion of equity and $3 billion of debt. At the time of acquisition, the business was generating $440 million of EBITDA, which equates to just over 6x leverage. Fast forward to today, on a run rate basis, the business generates $800 million of run-rate EBITDA. The debt within the business is $3.5 billion, which equates to about 4x leverage. Now we've done this, delevered the business through -- by taking a very balanced approach to capital allocation. We've been able to provide substantial distributions up to BBU and at the same time, delever the business to a more sustainable long-term leverage level. And finally, our advanced energy storage operations, Clarios, which is another exceptionally high-quality business. We bought this business in 2019 and we funded it with $3 billion of equity and $10 billion of debt. At the time of acquisition, the business was generating $1.6 billion of EBITDA resulting in leverage, again, just over 6% -- 6x. We've made quite a bit of progress on our operational improvement plans at Clarios, and the annual EBITDA today is at $1.7 billion. The business has also paid down the debt that was within the operations by about $750 million. So taking this two-pronged approach of enhancing the underlying EBITDA and paying down debt, we've now brought the deleveraged levels down to 5.4% -- 5.4x. So if we step back, we finance all of our businesses on a non-recourse basis, and we've been very focused on ensuring that this non-recourse borrowings that we're putting within our operating companies is done at favorable rate terms over the last few years. So today, the weighted average borrowing cost for BBU is about 5%, our weighted average maturity is about 5 years, and about half of our exposure is fixed or hedged. To put this in context, a 75 basis point increase in interest rates like we saw the Fed implemented last week results in about a $65 million impact to our interest expense, which is less than 5% of adjusted EFO today, and is very manageable for us given the cash flow profile of the business. So let's look at the cash flow profile of the business. On a run rate basis, which annualizes for the acquisitions that we've done this year, BBU is generating adjusted EBITDA of $2.5 billion. If we take off interest and taxes, we come to $1.5 billion of adjusted EFO. And off of that, if we take off maintenance, CapEx, depletion and other capital requirements, add BBU's proportionate share, our free cash flow on a run rate basis is about $800 million today. And this cash provides us with a significant amount of flexibility to refinance our operations, reinvest into our businesses or distribute up to BBU to fund our future growth. In fact, if we look at the free cash flow profile of our business over the years, it's grown at approximately 30% CAGR. And today, our free cash flow per unit is $3.65. And all of this cash flow is also helping fuel our capital recycling initiatives. During the last 12 months, our operations have returned to us $1 billion through distribution, and we've done this without selling any of the underlying operations or operating companies. And this cash flow profile, as you can see, has grown quite meaningfully over the years, and this has been a very deliberate effort. Cyrus touched on this earlier, but we've sold a lot of our smaller, more cyclical operations and reinvested those proceeds into large-scale cash-generative businesses. So let's bring all of this back to where we started. Total distributions of $1 billion, $1.5 billion of potential recycling through sales processes that we've talked to you about, provide us with a lot of flexibility alongside the credit facilities that we've got in place. So what does this mean in terms of our valuations? As we've laid out today, BBU has grown into a very high-quality business. In fact, the 18% EBITDA margin that we generate today is on par with high-quality, diversified service providers and with high-quality industrial companies. But our trading performance has not correlated with the quality of our earnings. To put this in context, we're trading at a mid-teens free cash flow yield and a 8x EV to EBITDA multiple. At the other end of the spectrum, our diversified companies and the best industrial companies in the world that generate a 5x free cash flow yield and a mid-teens EV to EBITDA multiple. So where should BBU trade? I'm not going to stand here and argue that we should trade at multiples that the best industrial companies in the world trade at, but that is the opportunity for us. And we do currently think, and I can argue that with anybody who was here in cocktails, that we are undervalued in where we're trading today. And this means there's significant upside in the value of our units and even at a very reasonable multiple of earnings and that's even at a very reasonable of multiple of earnings that we're generating today. Thank you for your time, and I'm going to give it back to Cyrus for Q&A.

We've got a few minutes for questions. Any questions? I see a couple of hands up. Just get the microphone over to the folks with questions.

Geoff Kwan, RBC. Cyrus, with the opening of -- or not opening, but in terms of now being more global on the number of offices, we've got investment professionals. Just wondering how the staffing profile is there? So for example, like Tokyo or some of these other places, are you staffing with kind of a senior person that kind of does relationship? Or are you kind of staffing it with kind of a fuller team of investment professionals that will cover the different sectors that you end up investing in?

Yes. Geoff, that's ultimately our plan, is to have full-scale teams doing everything in every region we operate in. And Anuj talked to you about all our regions, we generally do. Tokyo is a newer office. We have a smaller team there. And where we have a smaller team, we've leveraged the rest of Brookfield and all the other platforms that you've heard Anvil here present today, we leverage their capabilities as well. But ultimately, we'll have full scale teams in every region.

Steve Ko of Starvine Capital. So given where the share price is today and the stark discount that it trades, I think, about 50% to your internal estimate of NAV, and...

You're not arguing with [ Jazz Breton ]?

Not arguing, no. No. And a mid-teens free cash flow yield. When it comes to capital allocation, why or what would prevent you from going the path of a more significant share repurchase, given that these are businesses you know intimately? And it's just hard to imagine that buying external businesses would be more compelling.

Well, look, we think as BBU gets larger, it will attract a broader investor base. And if we're successful, and I think we will be in garnering interest for our corporation, the corporation that we launched, that will create a lot more demand for our shares or units. And just scaling up, creating more float should solve the problem. We are buying shares back. In fact, we buy back as much as we can every quarter under securities law, but we want to take a balanced approach to capital allocation. We're buying businesses, we're investing in things, we're reinvesting in our existing companies, and we're buying back our units. So that's the preference. I think there are a couple of hands in the back there.

Mona Nazir, CIBC Asset Management. There are so many push-and-pull factors, macro factors playing in. I'm just wondering what are you concerned about? Is it monetizations? Is it financial performance of certain parts of the portfolio? Is it labor?

Well, look, we're -- I'm not going to say we're concerned about everything, but we can keep an eye on all of those things. We don't have -- I don't -- I can't think of a specific large-scale concern. I think the greatest thing we can do right now at this point in time is focus on this environment that we're in where there are an abundance of opportunities, which are really -- appear to be really well priced. There are a lot of companies reaching out to us that need help. We're able to provide them with capital at a moment in time like this, and I think we're going to earn some phenomenal returns by putting money to work in the current environment. Bruce touched on that. That's clearly something we'll do across Brookfield.

Gary Ho from Desjardins. Cyrus, we heard from Mark's and Bruce's presentation earlier, and there's a few powerful trends, energy securitization, reshoring, et cetera. So how does that play into your thinking when you're looking at potential targets and/or things that you want to avoid when you're looking at candidates?

Well, we invest in companies that have strong cash flow, and we invest in companies that -- where we think we can improve their operations and that are market leaders. So if we can help an existing business reshore, we have capital to help them with that. But we're not geared up to -- we're not going to be investing in greenfield projects, if that's what your question is. I think we're going to stay focused on buying cash-flow-generating businesses. And there are many cash-flow-generating businesses that need capital for that, and I'm sure Sam is going to touch on that and what we've been doing there. I think we have time for one more, and then we have to call a quit.

Dimitry Khmelnitsky, Veritas Investment Research. And my question has to do with how confident are you in ability to sell Westinghouse within the next 2 quarters? And a follow-up on that would be the $1.5 billion of capital recycling proceeds in the near term, does that factor in Westinghouse, or is it something else?

Well, I'll let Jaspreet answer the second half of the question. But we are quite confident we're going to get this company sold. It's great business, it's got lots of tailwinds. High-quality businesses have access to capital, so we're quite confident.

Yes. So the short answer is it does, so we've captured in our prior year NAV and what we were carrying it on within that number. There's also no marketable securities and other things that we've talked about selling, so that's included in there as well.

So thank you very much. We look forward to speaking to you at the end. And now, I'm going to pass it over to Sam Pollock.

Okay. Even though the place has cleared out a bit, I'm told to start off. Hopefully, they'll come back. I'm not going to take it personally. And the truth of the matter is we've saved the best for last, so thank you. Good afternoon, and thank you for attending Brookfield Infrastructure's portion of the Investor Day here, and I'm pleased to welcome those who have joined us virtually as well as all of you in the crowd, or at least those who have stuck around. My name is Sam Pollock, and I'm the Chief Executive Officer of Brookfield Infrastructure Partners. And presenting with me today is our Chief Financial Officer, David Krant; and the Managing Director in our investment team, Natalie Hadad. For our presentation today, I'm going to review our accomplishments over the past 12 months as well as touch on our outlook for the year ahead. And then I'm going to ask David and Natalie to come up, and they're going to delve into a little bit more detail the tailwinds that are behind both our organic growth and our capital deployment. So first of all, 2022 is shaping up to be another successful year for Brookfield Infrastructure. Our success is exemplified by basically delivering on 3 strategic priorities. The first is generating record results; the second is executing on our asset rotation strategy; and the third is continuing to derisk our business by maintaining a strong balance sheet. Now, I'll start with our results. Now we're on track, as I said, to deliver record financial results. So far this year, our FFO is up 11% over the prior year. But if you adjust for a one-time item related to a weather event in our gas storage business back in 2021, our business is actually tracking 20% higher year-over-year. Now half of that increase is related to the outsized organic growth going on in our business today. That is an amount that is above our usual 6% to 9% target level. And the outperformance has occurred because our business is uniquely positioned to benefit from higher inflation. Now, the other half of our growth is attributed to the contribution from last year's outsized capital deployment, and that includes the privatization of Inter Pipeline. I'm happy to say that Inter Pipeline is now fully integrated into our business, and the business itself is exceeding our expectations. A lot of it has to do with the fact that we're in the midst of higher commodity prices. Now, 2022 has also been an incredibly active year with regards to new investments and asset sales. Now, of $2.8 billion of secured capital deployment, we have nearly doubled our annual new investments target. We have also already secured $900 million of proceeds from asset sales, and we expect to generate another $1.5 billion through 3 ongoing sales processes. Now, our asset rotation strategy has accomplished a number of objectives for us. The first one is we've redeployed capital from mature businesses that had pretty minimal organic growth in them to platforms that have significant outsized growth in front of them. Second, we exited a couple of GDP-sensitive businesses and we redeployed the proceeds into highly contracted data and utility businesses. Now the $2.8 billion I was referring to was invested across 5 high-quality businesses. In Australia, in fact, we closed 3 transactions during the year, leveraging our strong local presence. The largest investment with the privatization of a regulated utility called AusNet. It consists of a large-scale platform of regulated transaction distribution networks in the state of Victoria. The business is extremely well positioned to participate in the decarbonization of Victoria's economy, and we expect that will be approximately $12 billion of contracted and regulated asset base to almost triple over the next 25 years. The other 2 investments were in Intellihub and Uniti, and these are high-quality businesses in the smart metering and fiber-to-the-home sectors. The other region we were active in was Europe. The first transaction to close will be the privatization of a U.K. company that is a leading global provider of home services. Not surprisingly, it's called HomeServe. We bought this business because we believe it will be highly complementary to our existing U.S. and European Residential Infrastructure businesses. Now you're going to hear more about our strategy for our Residential Infrastructure platform from Natalie just a bit later, but suffice it to say that the market opportunity for demand-side decarbonization businesses will be large, and we plan to build an industry leader. Now the second transaction we secured in Europe is an investment into a marquee German telecom tower portfolio called DFMG. We acquired a 51% stake alongside our partner in a portfolio of 36,000 towers in Deutsche Telekom. Now this business will generate highly resilient cash flows as it's underpinned by a 30-year inflation-linked take-or-pay contract by Deutsche Telekom. And then, it's the transaction that's probably garnered the most attention. Last month, we announced a partnership with Intel Corporation to construct a $30 billion semiconductor foundry in Arizona. As a result of this particular transaction, we will not only significantly add to our capital backlog but we forecast that will actually reach record levels, as this project will more than offset a number of significant projects that we'll be commissioning in 2022, including the Heartland project I mentioned earlier. Now thematically, this investment is an example how Brookfield can leverage its flexible and large-scale access to capital to structure a transaction where we can participate in the growing trend to onshore critical supply chains. Now, we've often emphasized that capital recycling is a key component of our full cycle investment strategy. This year, despite some market volatility and rising interest rates, we have successfully divested 4 mature assets at attractive valuations. The first one I'll touch on is our U.S. container terminals. In June, we closed the sale of a 49% interest in this business to our existing partner and enterprise value of about $1.9 billion. Over a 8-year hold period, we successfully executed our business plan, which was to grow and diversify the volumes as well as to fully automate the Los Angeles Terminal. This sale resulted in an IRR of 19% during our hold period. Then in July, we announced that we had reached an agreement to sell a portfolio of 2,400 kilometers of newly-constructed electricity transmission lines in Brazil at an enterprise value of about USD 1.4 billion. On this particular deal, we earned a 22% return, and we continued to build about 2,900 kilometers of lines that will probably sell down the road. Also that month, it was obviously a very busy month, we signed an agreement to sell a portfolio of 1,500 telecom towers in New Zealand. Now I'll give you a little background on this particular transaction. In 2019, we bought a 50% stake in a fully integrated telecom operation in New Zealand for about 7x EBITDA. Let's roll forward about 3 years to this summer, we're able to successfully exit the towers at around a 34x EBITDA multiple. So what this sale has resulted is that we've recovered virtually all our capital out of the business and we retain a highly profitable business that continues to own a valuable fiber network as well as one of the country's leading mobile network operators. And in addition to those 3, in India, we sold a portfolio of roads and EBITDA multiple of just over 14x and earned a local return of about 13%. Now that transaction, we had just recently completed the expansion of 2 roads. We packed them up with an existing portfolio of roads that were mature, and then we sold that portfolio to a group of financial buyers who were attracted to the high-quality asset base. So the one thing I want to mention is that even with all this activity, we've accomplished all these things while still maintaining strong financial metrics. Now it's always been a key pillar, and you've heard it with all the other companies, where we maintain a very well-capitalized balance sheet, and today is no different for us as well. We have strong corporate liquidity of about $3 billion. We have a solid investment grade at BBB+. Our payout ratio is within our long-term target range of 60% to 70%. We have FFO hedging in place for the next 24 months that would reduce any headwinds related to FX. And virtually all our debt is fixed rate, and we have no significant near-term maturities. Okay. So before we take a look at our prospects for the year ahead, let's just take a little bit of a step back. First off, our mission is very clear. It is to provide sustainable per unit cash flow growth over the long term, and the purpose of that is to support a 5% to 9% annual distribution growth target. As you can see on this chart, we're very proud of our track record of delivering on this compounded FFO per unit growth, which has been about 11% over the past 10 years, and this is through various market cycles as well as through COVID. As a result of this steady, consistent growth, we've also provided compounded annual distribution growth to our investors of about 9% over that same period. As it relates to this year, our forecasted results for 2022 are roughly 11% ahead of last year. But again, as I mentioned earlier, on an adjusted basis, reflecting that one-time item in 2021, we're expected to exceed last year by about 16%. So the main drivers of our performance, particularly for the year ahead, are simple and can be distilled in 2 components: organic growth and capital deployment. Success with organic growth is measured in 2 principal ways. Are we accretively capturing inflation and increasing our margins in our business? And are we successfully executing on our capital backlog and replenishing it? Now with regards to capital deployment, we are successful if we can continue to invest at our target levels of about $1.5 billion a year, and probably more important that we're investing that capital at our targeted returns of 12% to 15%, but also in doing that, ensuring that we have appropriate downside protection. So your question is, how are we doing? Well, from an organic growth perspective, the components are exceeding our expectations. If we look at capturing inflation, so far during 2022, elevated inflation has contributed 5% to 6% increase to our FFO per unit, and that's relative to a normal target of 2% or 3%. As we look forward, we expect inflationary pressures to persist from factors such as the cost of decarbonization as well as aging demographics. Now looking at our backlog. For the balance of this year, we're focused on the completion of our large-scale projects, including the Heartland Complex, our Brazilian transmission lines, and the commission of those projects will provide high visibility for our organic growth in 2023. Now with the Intel agreement, we have successfully replenished our capital backlog, adding about $4 billion to it that will be invested over a multi-year construction period. And in addition to that, as we talked about last year, we are continuing to build new platforms, and that will create further opportunities for us to invest in organic projects. From a new investment perspective, our outlook is equally strong. For the second year in a row, we have secured 2x our annual deployment target. Now you can look at that a different way. We have already locked in next year's capital deployment with DFMG and HomeServe closing late in Q4 and in Q1 of next year. From a longer-term perspective, our robust deal flow is expected to continue as the favorable economic -- macroeconomic trends drive an infrastructure super cycle. Now Nat is going to be up in a second, and she's going to describe some of these trends, which we have dubbed the 3 Ds. So I'll conclude my section here by pulling this all together for you, and what it means is that we are well positioned for another strong year in 2023 and beyond. And to that end, we thought we'd give you a little bit of guidance. We believe that we can achieve above our 10-year average, and we look to generate somewhere in the 12% to 15% growth for next year for our FFO. So let me leave it there. I'll be back up later, and I'll ask David to come up.

All right. Thank you, Sam, and good afternoon, everyone. As introduced, my name is David Krant, and I'm the Chief Financial Officer of Brookfield Infrastructure. Now throughout the day today and actually for the last year, elevated inflation and rising interest rates have dominated news cycles. These economic variables would be headwinds for many companies around the world, but not ours. In fact, over the next few minutes, I'm going to detail why this unique operating environment that we're in today could provide us with some of the most meaningful compounding of organic growth that we've seen in our history. The confidence in our ability to deliver on the strong organic growth can be summarized by 4 things. First is inflation. Our business is well positioned to capture it, and it is a positive tailwind for us. Secondly, with respect to higher utilization and expanding our capacity, as Sam said, our backlog is at record levels, which gives us high visibility into the organic growth in the years ahead. In terms of our asset rotation, this round has provided us with meaningful accretion to the organic growth outlook on the new businesses acquired relative to the ones we have sold. And finally, our ability to deliver on these 3 key elements of organic growth are enhanced by the largely fixed nature of our interest expense and the high visibility we have into our foreign exchange risk management through our FFO hedging program. Now the combination of these factors working together within our businesses should result in cash flow growth at the high end of our 6% to 9% target range or better. Now, let's walk through each of these in a bit of detail. Now, inflation has been elevated for some time now. And the fact that 85% of our businesses are either going to directly capture it or are protected from it is extremely valuable in this environment. With respect to our inflation indexation, we group it into 2 buckets. The first are those businesses that will directly pass on inflation to end users. That represents nearly 3/4 of our EBITDA today. The second bucket are those that operate under a fee-for-service model. These take rising input costs, deliver, transport and deliver -- and ultimately to an end user, a higher revenue product, thereby fixing our EBITDA. Combined, as I said, these businesses are extremely powerful in this environment. Now given how much our business stands to benefit from inflation, let's take a look around the world and see where we've captured it. Now, inflation is rising in pretty much every market we invest in around the world. And when you own a global diversified portfolio of infrastructure assets, it's important to see how meaningful that is. Over the last 5 years, if we look across the businesses we've owned, inflation has averaged 3% globally. Now, what we've captured based on inflationary pass-through to date in 2022, we've actually been able to deliver 5% to 6% organic growth, nearly double. And if we look at current trends in the market today, in certain markets, we actually believe we can further capture inflation in the next 6 to 12 months ahead as we look through future price increases. Now I say inflation outlooks in certain regions are mixed. But I think regardless, it remains elevated from historical levels across the Board. And there are a few trends that have been alluded to throughout the day today that we think could result in at least higher than historical inflation in the medium-to-long term. The first 2 of these trends are decarbonization and deglobalization. Natalie will soon touch on how these are driving our capital deployment, but importantly, these are also inflationary in the markets undergoing these changes. Both will require billions of dollars of new investment and highly skilled labor. Now, as highly skilled labor is in demand and unemployment remains low, this will create inflation in these markets. The third trend will have a similar impact on inflation, but it's a bit different. It's aging demographics. In the western economy, we've been going through this for the last decade, as baby boomers have aged and birth rates slowed. The interesting part is that the next decade ahead, China will soon be entering this phase of their growth, with a decline in their working age of their population. Now China is known as the world's largest exporter in manufacturer of goods, so this will create inflationary pressures in other markets around the world. Now it's obvious that central banks will have this on top of their mind, and we assume that they will be able to control it. But needless to say, it is a driver of long-term economic outlook for us. Now moving from inflation to the second component, and this is around increasing the size and the scale of our systems today. We can do that through either increasing the utilization on our existing networks. That -- this form of growth can be highly accretive, because additional volumes on our lines or our rail networks can enhance margins significantly because there's little to any investment needed. The second form of growth in this fashion is capital backlog and the commissioning of new assets into our asset base. As Sam alluded to, we're expecting to meaningfully add 2 large-scale projects in the next coming months, which together could roughly represent about $2 billion of capital into our asset base. At this event last year, I spoke about building platform value. Success in our ability in doing that would be measured through the growth of our capital backlog. Now despite commissioning nearly $2 billion of capital into our -- out of our backlog and into our earnings, we actually believe that we'll be on track to deliver record backlog as we look to the year ahead. In fact, with the signing of the Intel transaction and the capital backlog and platforms that we've acquired through our new investments, we will nearly triple the size of our run-rate capital backlog by the end of this year. Now if I think about the key drivers, as I said, of our growth and in our backlog will be most notably the Intel transaction, which could be the first of several of these types of opportunities. And secondly, it's the impact of our new acquisitions. Now when I look at the businesses we've acquired in the last year that Sam highlighted in his introduction, several of them have significant organic growth. In fact, we expect all of them to be at the mid or high end of our target growth range. Specifically, at AusNet, as Sam said, we're building out renewable power transmission lines. At Uniti, we acquired a portfolio of 550,000 contracted fiber connections, of which only 150,000 are revenue-generating today. At Intellihub, our metering business, we acquired 1.5 million active meters and an order backlog of contracted growth of another 1.7 million. And finally, at DFMG, our tower portfolio in Europe, the 36,000 towers also came with an additional 5,200 build-to-suit towers contracted by Deutsche Telekom over the next 5 years. So pulling those all together, that's an added $300 million of contracted, highly visible growth that we have in the next 3 years. When I compare that to the assets or the backlog, I should say, of the assets that we sold, it pales in comparison. It was about $10 million that we had earmarked for those investments. And this transitions nicely to that third element of visibility that we have, and that's around our asset-rotation strategy. There are 2 ways asset rotation can be accretive and also seen in our results. The first are immediate impacts, going in yields. We exited our businesses on an average rate of about 6% from an FFO yield perspective, and our going-in yield average is about 7%, modest accretion from day 1. The more meaningful element of this round of asset rotation is in the form of that outsized organic growth opportunity. Through the backlog, we've acquired full inflation pass-through. We believe that we can increase the organic growth on the businesses acquired by 3x of the level we sold. In fact, those 3 platforms that we highlighted, including HomeServe, Intellihub and Uniti, we could actually double in the next 5 years alone. So those are some visibility into the, I'd say, the revenue or EBITDA-generating activities that we have as key components of our organic growth. Our ability to deliver that to the bottom line will be impacted by rising interest rates and foreign exchange, both of which we have well under control. I'll start with interest rates. As you've heard throughout the day, our principles of Brookfield Infrastructure are the same as of the other listed affiliates. We raised our debt at the asset level, we looked to secure in local currencies to prevent mismatch, we seek duration that's in line with our contract life, the project life for the regulatory framework, and most importantly, we fix the rates on our debt where it's available. Now during this historically low period of interest rates, we have been active. We've refinanced a significant amount of our maturing debt to lock in those low levels. What that doesn't mean is that all of the debt on our balance sheet has been issued at these historically low levels. And in fact, if I look at the few years ahead of us, in fact, the next 2.5, the average interest rate implied on the debt that's maturing is 6%. Seems high. But if you think back to our principles, we look for fixed rates and we do it for a long-term basis, meaning we'd likely raise this debt that's maturing in the next few years, 5, 10, 15 years ago in some instances when rates were much more akin-to-normal levels. When I look at where current interest rates are for the types and risk profile of assets that we own today and what we're actually executing on in the market today, using the 10-year treasury of, last I checked, 4% approximately and the implied spread on an investment-grade BBB bond of about another 200 basis points, the all-in cost of debt for risk assets of our type is about 6%. What that means is I look ahead to the years to come, the refinancing activities that we will be doing will not have a meaningful impact on the P&L or our interest expense included therein. The other element of rising rates is obviously if you have floating rate exposure, in this regard, we have very little. In fact, 90% of our debt issued outside of Brazil is fixed, I should say, very little floating. We exclude Brazil from this analysis for one main reason. It's that their central bank is near the end, if not at the end of their tightening cycle, which is quite different than other parts of the world that are in the midst of their rate hiking process. So when I'm trying to quantify the impact of rising rates on our business, that's not one of the markets that we think has that room to run. To quantify that exact impact that I alluded to, it's quite simple. We take our total proportion of burns that's at Brookfield Infrastructure share, we removed the debt that is fixed or has been issued in Brazil. That leaves us with approximately $1.8 billion of floating rate debt on our balance sheet today. Now the implied interest rate on that debt for the first half of 2022 and our results was about 4.25%. As I said, the rate implicit in 2023 and actually in the current levels, it's about 6%, meaning there's about 175 basis points of further increases that could potentially come or that are currently priced in. What that means from an FFO perspective for our business is that there's a potential impact of about $30 million over the coming 18 months. To put that into context, that represents approximately 1% of our 2023 forecasted funds from operations. A similar exercise is important with respect to foreign exchange risk. In the last few months, the U.S. dollar has strengthened significantly pretty much against every currency in the world. Now we have always employed a very active FFO hedging program. In fact, the next 24 months of our foreign-denominated FFO is fully hedged. When I look -- when I take a step back and look at what that means for our business, 82% of our FFO this year and next year are either denominated in USD naturally or are hedged back to USD at rates of which we have locked in. To determine the impact on our business of those locked-in rates when I compare those to the 2022 levels, they are fairly consistent with what we have in our P&L today. In fact, rates are on average about 1.5% below those current levels. When I look at the percentage of our businesses that are denominating those currencies, which is just over half, there's about a 75 basis point increase or impact from lower foreign exchange in the next 24 months. Both of these, we feel we are extremely well positioned to manage, and hence, the confidence in our ability to deliver on our organic growth in this environment. Now to summarize these thoughts today, we've tried to summarize how we've been performing in this current environment relative to our long-term targets. The first 3 components that I alluded to are those EBITDA-driving generators. With respect to inflation, this is positive for our business, and we are twice the level we have historically. With respect to our capacity or our backlog, we have now have visibility into $6 billion of CapEx that we expect to complete over the next 3 years. And finally, with respect to asset rotation, this round has been significant both in terms of its size but also in the outlook and accretion it will give us in the organic growth profile of the businesses that we've acquired. Now, our ability to deliver that to you and our unitholders will not be impacted by the rising-rate environment that we're in and the foreign exchange volatility that we have experienced. So with that, I'd like to thank everyone for the time this afternoon. And I'll now turn it over to Natalie.

Okay. Well, thank you, David. And hello, everyone. My name is Natalie Hadad, and I am the Managing Director focused on investment activities in our Brookfield Infrastructure Group. I am very excited to discuss the 3 Ds, which is a term we coined here at Brookfield Infrastructure, as we think about our deployment teams and which stands for digitalization, decarbonization and deglobalization. Individually, each of these macroeconomic investment themes are driving significant capital-deployment opportunities for us, and we expect this trend to continue in the foreseeable future. So first off, I will cover digitalization, which refers to the Infrastructure investment opportunities that are derived from the exponential increase in data consumption. Data is still the world's fastest-growing commodity. For every minute we spend on the Internet, we send 200 million e-mails, 70 million messages and generate over 500 hours of YouTube content. So based on current usage patterns, the amount of data that is generated globally is expected to double in the next 18 months, and this pace is only going to continue to accelerate. All of this data needs to be transported, processed and stored. And in order to support the growth, incremental investments are required in each one of these segments. Historically, these investments were funded by traditional telecom operators. But given the increasing demand placed on their capital, they're now doing 2 things: one, they are increasing their reliance on neutral host shared infrastructure or outsourcing; and two, they are seeking new funding partners in order to alleviate the demands or the pressures on their balance sheet. And both of these trends create significant tailwinds for well-capitalized investors with deep sector knowledge that can deploy billions of dollars worth of capital in the medium-to-long term and capture these opportunities. So we are already seeing the market opportunity playing out across 3 verticals: fiber networks; wireless networks; and data centers. With fiber, we are witnessing a once in a 100-year investment upgrade cycle to replace legacy copper networks with fiber-to-the-home infrastructure for new and existing residential developments. Most of our growth to date has been in OECD countries such as France, U.K. and the U.S., where average residential broadband consumption is approaching upwards of 500 gigabytes per month. In wireless infrastructure, the mobile network operators, or MNOs, need to make significant investments in order to densify their networks and make them 5G-ready. We expect to continue to see the MNOs enter into strategic partnerships to free up capital by divesting critical infrastructure that currently sits under balance sheet. And lastly, the data center sector is experiencing significant tailwinds from the migration-to-cloud computing. When combined with the expected increase in data demand, it is estimated that 10,000 megawatts of new data center capacity is required in the next decade. And now, I'd like to focus on wireless networks. So outside of the U.S., the tower market remains highly fragmented, with a higher proportion of towers still owned by the MNOs. We anticipate that further tower divestitures will take place in the coming years as these MNOs look for alternative funding sources. As one of the largest, global, independent tower operators with significant operating expertise, we are very well positioned as a trusted partner to manage this critical infrastructure on behalf of the MNOs. And a great example is our recent investment in DFMG, which Sam alluded to earlier. And as part of this transaction, we acquired a majority interest in a portfolio of 36,000 towers in Germany from Deutsche Telekom, who's now going to use those proceeds and redirect them into other parts of their business. From our perspective, this represents a fantastic opportunity to invest in a tower portfolio of scale with attractive, long-term contracted cash flows and with a very robust organic growth outlook. Germany is Europe's largest country and is a fast-growing tower market, given that it lacks in national digitalization when compared to other larger economies. In addition to the organic tower build-out, DFMG is very well positioned to participate in further tower consolidation in Europe and drive outsized returns. So the second theme is one that we introduced in our last earnings call, and it's decarbonization. We talked about how the decarbonization of the global economy will be a multi-decade initiative requiring substantial investments. To date, attention has focused on the industries and companies that are responsible or directly responsible for the emissions or supply-side decarbonization. It is our view that the fuels used today to power the global economy will either transition to net zero or will be runoff responsibly and safely. Both of these paths create significant and compelling investment opportunities at an appropriate value-based entry point and conservative forecasts. Now, a second aspect of decarbonization are the investment opportunities created by consumer preferences for energy-efficient solutions, or demand-side decarbonization. The opportunities are driven by consumer preferences for energy-efficient solutions that can help them manage their carbon footprints, meet legislated net-zero targets, and thus create a market opportunity for infrastructure capital to alleviate the high upfront cost of installation and the ongoing complexity of servicing and maintenance. We will now share a short video in which a few of my colleagues will further demonstrate the value that we see in demand-side decarbonization as a key capital deployment driver for us. [Presentation]

All right. So as Maria and Matt touched on the video, we are building residential infrastructure platforms to provide products and services in support of demand-side decarbonization initiatives. We initiated our North American operations back in 2018 with an investment in Enercare, a business that at the time provided in-home infrastructure to 1 million households under a long-term rental model. Fast forward to 2022, we have expanded our franchise significantly under a number of bolt-on acquisitions that increased geographic presence as well as expanded the customer service offering, which now includes a growing submetering business, solar products as well as solutions to electrify the home. Furthermore, with the acquisition of HomeServe, we will further complement our rental offering by providing homeowners with recurring subscription-based repair policies for residential infrastructure products. HomeServe's North American operations are highly complementary with very limited overlap, providing access to close to 5 million membership customers and over 1,000 utility partnerships. After scaling our operations in North America, we turned to Europe. And we began building a European residential infrastructure platform with 2 small-scale high-growth investments in [ Termando ] and Boxed, which provided a presence in Germany and the U.K. European utilities are very focused on reducing Scope 3 emissions with individual households expected to play a very key role. However, greenhome solutions are expensive and complex, leading to a higher propensity to rent and ensure in-home infrastructure versus a plain vanilla ownership model. These decarbonization tailwinds are creating significant organic growth opportunities for us. The best example is a pilot project we launched in Germany to offer heat pumps as a rental product in order to mitigate the high upfront cost of ownership that our customers would have otherwise born. Demand has exceeded expectations, and we expect to continue to benefit from Germany's shift away from conventional gas-only boilers. Now despite our recent success in growing our operations, scaling our platform in a meaningful way or to a size big enough that would have had a material impact on our results would have taken a significant amount of time. But with the addition of HomeServe's well-established European platform, we will immediately accelerate the growth in Europe and increase our footprint to close to 4 million households. The last thing that I will touch on today is the effect of deglobalization, which is creating significant opportunities for investment across 3 different verticals. First, the current geopolitical environment has spotlighted the importance of becoming energy-independent. Natural gas and LNG will continue to be leading transition fuels in the move to net zero, and they will also play a very key role in providing global energy security. We've seen this benefit our LNG export facilities firsthand. We've added a sixth liquefaction train at Sabine Pass that has helped us keep up with increasing demand while being underpinned by a long-term offtake agreement. Second, while the peak of the supply chain disruption is likely behind us, transportation networks and assets will continue to require significant capital investments in order to gain resiliency for -- and better address long-term rising demand, add capacity in order to clear up bottlenecks as well as tweak traditional supply chains, given or to take into account geopolitical considerations. Lastly, one specific industry that is at the crossroads of both supply chain and geopolitical disruption is the semiconductor industry, and we've touched on this earlier today. We've seen the reshoring of critical industries take on a sense of urgency, and we expect that this trend will generate significant deal flow for us. And with that, I would like to tell you a little more about the semiconductor theme. Corporations and governments have realized that essential and highly-strategic manufacturing processes need to be reshored. And in recognition of this need, governments in the U.S. and Europe have announced programs totaling over $100 billion in support of the onshoring of the manufacturing of semiconductors. In any case, there is still room for private capital to partner with industry, given that the globalization projects are very large scale. And a great example of this is our investment in Intel's semiconductor fabrication facility, which is currently under construction. The total project cost is expected to be around $30 billion, and we will invest $15 billion over the construction period for a 49% interest in the facility. Given the quality of the deal parameters or the investment parameters, the majority of our capital commitment has been sourced from binding non-recourse debt financing, while the majority of our equity requirement will be deployed closer to the operational stage of the project. This investment is structured with typical deal protections that will allow us to achieve infrastructure risk-adjusted returns, and we draw parallels to other data investments such as hyperscale data centers that are underpinned by long-term contracts with creditworthy counterparties where we're not exposed to technological risk. In this instance, we view Intel as a best-in-class, creditworthy counterparty and a market-leading partner. We anticipate this reshoring trend will lead to other large-scale opportunities, whether with Intel or other industrial players. And lastly, I would like to bring this all back to what it means for Brookfield Infrastructure. Over the past 2 years, we have seen a significant level of investment activity well above our annual investment target of $1.5 billion. With $2.8 billion of new investments secured so far this year, we have nearly doubled our investment goal for the year and have nearly secured our deployment target for 2023. Looking forward, the 3 Ds that we've discussed today are going to require trillions of dollars of capital with -- globally, and Brookfield is very well positioned to capture these opportunities, given our large-scale and flexible capital, our global footprint with boots on the ground and our deep operating expertise. And with that, I will pass it over to Sam for concluding remarks.

Thank you, Natalie. I know you're all hoping to go out there for drinks, so we'll keep this short. I hope that was helpful, and I just want to make sure there's just -- you got a couple of takeaways from that presentation, and it's actually pretty simple. First of all, we want you to think of BIP as being a very resilient company, and that really comes down to our highly-contracted cash flows as well as our strong balance sheet. The second thing we want you to take away is the fact that we have exceptionally strong growth in front of us, and a lot of that has to do with the tailwinds behind our organic growth as well as the secular trends that are providing tremendous opportunities to deploy capital in the coming years. And if you put those 2 together, it's the reason we believe that Brookfield Infrastructure is still, still the one and only gro-tility. So I'll end it there, and I'd be happy to take any questions.

Andrew Kuske, Credit Suisse. Sam, I love the alliteration on the 3 Ds. But maybe you could give us some context on the 3 Ds, what do you think the competitive advantages Brookfield has in each of those 3 Ds, the similarities and say, the differences?

Okay. Well, first, I think of the 3, the biggest opportunity relates to decarbonization as far as capital spend and -- if you've been here today, you've probably heard us talk a lot about our ability on the supply side and everything that we're doing related to transition, and then just our historic experience in investing in utilities and now, the demand-side decarbonization. So I think we've staked out a number of parts of the whole decarbonization sector, that gives us a clear advantage. And the capital needs are large there, so between the operational capabilities and the capital, I think clearly, we should be seen as a leader for that sector. As it relates to digitalization, that's probably the second largest investment area for the next, let's call it, 20 years. I think that will be relatively competitive. I think we have invested in every part of the world, in every part of the infrastructure component of the telecom sector, so I think we have the operational skills there. It will be more competitive and more cost of capital oriented, but I still think we will get more than our fair share of good opportunities, as we've proven out recently with the DFMG transaction. And then on deglobalization, look, that is new territory. And I think we've already put our stake in the ground by doing the Intel transaction. And I can tell you, all our peers are calling, all the investment banks are calling even us to ask us, well, how do you do this and what does it all mean? So clearly, we're ahead of everyone on that one. People will catch up, but I think we've established ourselves as a leader in that area, and I think we'll at least have a head start.

That's helpful. And then just as a follow-up. You obviously value investors that are DCF-focused. But from a NAV standpoint, when we think about the stock in particular today, are there certain areas you want to bias the balance sheet towards that have maybe a more pronounced impact on the NAV today, like, digital being one of them where valuations tend to be higher, growth rates tend to be higher? How do you think about that on a longer-term basis?

Look, I don't know if we -- first of all, when we make investments, we're making them for 10, 15, 20 years. So the ability to pivot our balance sheet quickly, we can't do that based on what's the flavor of the day. So we make investments, and we're just looking for opportunities to invest, as you just mentioned, on a value base so we can earn our 12% to 15% return with hopefully very little downside risk associated with it. And just clip those coupons and compound wealth over a long period of time, and not get focused on people love data centers today, but then 6 months later, people hate them. We don't think about that. We just focus on each deal as they come along. And then when we see opportunities to sell for value, we will take those opportunities. There's my friend here, Cherilyn.

Cherilyn Radbourne from TD Securities. I feel like Andrew stole my question on the 3 Ds, so I'll ask something else. So you've presented a pretty compelling organic growth backlog for the business. Clearly, for the last couple of years, you've been very active on acquisitions. You haven't talked a lot about your current M&A pipeline. And I guess I'd just be curious, how do you high-grade in environment like this, where presumably, there are some opportunities to acquire for value that are emerging, possibly including take privates? So can you maybe speak to that a little bit?

Sure. So I can't be specific, but what I can say is we have sort of a continuous process. You can appreciate, we have deal teams, all of us have deal teams around the world, and we have a whole funnel of opportunities, and we'll work on some. And then as the world changes, we will let some of them drop and focus on the ones that we think provide better opportunity. We only have so much capital we can deploy, so we're always trying to pick the best opportunities. And similarly, as we think about asset rotations, just coming back to what Andrew was asking about, there's times when some assets are more in favor than others. And even though we have sort of a timeline of when we think we'll complete a business plan for a particular investment, we might accelerate things if it's particularly hot and sell that into the market. So it's a constant evaluation month-to-month of what deals should we focus on and what businesses should we recycle. And so it is a very much iterate process, and sometimes, it makes sense to privatize and we've done a lot of privatizations in the last couple of years. Other times, it's better due to carve-outs. We may be in this period of acquiring more public companies in the next couple of years if the markets keep on doing what they're doing last couple of days. There's a question back there.

Rob Catellier, CIBC Capital Markets. I have a question about the global transition funds. It seems like BAM has some pretty big aspirations there and some early success. I wonder how you see those investment opportunities permeating through the various listed entities, and how you'd characterize the relative opportunity for Brookfield Infrastructure there? And if you could specifically answer -- address the ability to invest in the nuclear value chain at BIP?

Okay. So those are less relevant for me, but I'll tackle them. On the transition front, I would expect the vast majority, if not all of them, would go through BIP. Having said that, as you can see from the demand-side decarbonization, there's businesses we're still figuring out where the right home is it for. And there might be some businesses today that might have a transition opportunity within it, say, IPL, where we could invest related to hydrogen. And so we would likely do that within BIP. So I'd say for the most part, let's keep the answer simple. It's primarily BEP for transition, but there will be situations where it will make sense for BIP as well. As it relates to nuclear, I think, again, that's more related to renewable energy. I think they probably have aspirations of looking into that sector as another one of the technologies that they spoke at earlier, and it's probably not something that we would do inside BIP. He's nodding, so that's -- I must have answered that right.

Naji Baydoun, Industrial Alliance. You've got a remarkably successful couple of years in acquisitions. I'm just wondering when you think about your $1.5 billion annual target, where do you think the run rate is today, just given the opportunities ahead? And maybe just a refresher on how you could fund excess capital deployment opportunities?

Okay. I kind of figured I set myself up for that question. So we -- obviously, we haven't yet adjusted that target level. I think it's safe to say, though, that even though investments can be lumpy, our expectation is probably that in the near future, we might have to move that level up and the target might be closer to 2, let's say, on a run-rate basis. As far as funding it, we are now at that stage in our investments where we have a lot of businesses maturing. And we probably have -- I think this year alone, we're thinking about $2.5 billion of proceeds from different asset sales. That's probably not a bad run rate for us going forward as far as proceeds from asset sales. Some years, depending on market conditions might be a bit higher, a bit lower, but that's not a bad number. And so that will fund the vast majority of new investments. And then obviously, we have the capital markets to help us to the extent that we invest more than we expect. I see raised hands right there.

My name is [ James Small ]. I'm very intrigued by what I've heard today. I've been curious how your Inter Pipeline transaction and your Intel deal, would you describe them as opportunistic or start up a trend? Because they don't seem to fit inside the typical infrastructure nomenclature. It's not a utility, it's not even like the mass of the telecom business. But is this simply a one-off or just two-off transactions? Or are these something that sort of indicates the direction that BIP is going to go? Curious about that.

Well, look, I would say, for the most part, that IPL for us would be middle of the fairway. It's a very strong midstream franchise. Obviously, the Heartland facility is maybe a little bit closer to the rough. But for the most part, that would be, I think, traditional asset class for us. Intel is one of those that we think is going to be an emerging infrastructure class, so we took a view as to the various characteristics of structure we could come up with. And Natalie, I thought, described it pretty well by giving you a couple of examples, namely hyperscale facilities. We think this is actually a better investment than most hyperscale facilities today just because of the counterparty and some of the protections we have in the contracts, and we think the dollars in the near term are going to be very large. So I think there's an ability for us to create a new asset class related to data. I think that's probably where it fits. And I think you'll find lots of copycats in the not-too-distant future.

Rob Hope, Scotiabank. Just in terms of the investment outlook moving forward, over the last year, similar to what Beth had actually discussed was that a lot of the acquisitions you've made have a very long and pretty visible development pipeline. So when you take a look at kind of the next couple of years in terms of your acquisition strategy, are we seeing less of a focus of buying for value on day 1 and yet -- and I guess, more of a focus on building out that growth and really say, crystallizing that value?

No, I wouldn't say that. I think, look, every market is a little different. We love to buy cash flow, so we can buy straight cash and have very little uncertainty around FFO, then that's great, and we'll do that. And that comes up. I think IPL was that to a certain extent. Obviously, it was completed in Heartland, but the rest of the business was a high cash flowing business. And we've done a number of NTS in the past. Some of the other businesses, particularly ones in Australia, the fiber-to-the-home, smart-metering business, the going-in cash was relatively modest but we have a very visible and contracted pipeline. And so our ability to look out 3 or 4 years and see the amount of cash that's going to be generated was very visible. So we're comfortable buying that as well because we don't feel we're taking, let's call it, platform risk or growth exposure. We actually can see what it is. And then we're just trying to obviously grow those businesses and add to the number of contracted growth that's in place. So I appreciate, people might want to go get drinks. So maybe we'll end it there. I think my job is to thank everyone who was on -- listening to us virtually as well as everyone here. Thank you very much for spending all this time and suffering through 4 hours or so. I hope it wasn't too bad. For everyone in this room, we would invite you to drinks. I believe it's in the museum room, which is some -- is that right? Yes. Okay. Suzanne says that's right, so we'll wind down and see you in the room. Thank you.