Infratil Limited (IFT) Earnings Call Transcript & Summary

Okay. Thank you, and good morning, everyone from Wellington, New Zealand. Marko Bogoievski, Chief Executive of Infratil Limited. I'm pleased to join everyone online today. Just a couple of quick reminders. We have got a full agenda. We obviously are going 100% virtual. We do have a facility to ask questions throughout the day. So please feel free to ask any questions at any time through the platform. And we've got Matt Ross, Mark Flesher, who'll be collating questions. The sort of format we'd like to use is to have Q&A at the end of each block. So the first hour will be myself, Jason Boyes; Incoming Chief Executive; and Phillippa Harford, our Chief Financial Officer. And then we'll progress into the energy and other businesses throughout the day. So thank you. With that, I'd like to make a start on the day. I'm going to get on to my first slide. So a couple of more formal introductions. So as I said, Chief Executive for the next 6 weeks, at least, I will be continuing in my role as Chief Executive of Morrison & Co. So I think one of the messages we're trying to communicate today is that this is a sort of a very stable transition. We've been -- if you think about it, it's been 27 years since Infratil listed, only had 2 chief executives, we're about to hand it over to a third. And I would expect it's about 2030 before we're having this conversation again with the next Chief Executive. 150 people now Morrison & Co supporting myself, Phillippa and Jason, and that's only growing as we invest to cover more sectors, more jurisdictions and to provide better support for Infratil and other clients and Morrison & Co managers. Jason Boyes will be doing just about all the communications this morning. Shortly, I'll hand it over to him. Jason has been with the firm for a long time since 2011. He's obviously worked very closely with myself and Phillippa, but the whole senior team at Morrison & Co, and he's got the whole heart of support myself and the Infratil Board. We wish him all the best, and we know we're in very good hands. And further, I guess, on the tune of stabilities, we shouldn't forget, Phillippa has been in that role for CFO for 5 years. So one of the messages, again, will be a continuation of the investment approach, which has delivered, I think, very successful outcomes over a very long period of time. But obviously, hopefully delivered with different personalities and different style. And you can judge for yourself, I guess, at the end of the day, how different. I think we're very conscious of the fact that there are some new investors to Infratil. And I think it's useful to recap what we mean by our investment approach and model. I just wanted to summarize it from my perspective. And actually, we did an interesting exercise. We looked at some of the original statements in the 1994 prospectus. So on that left-hand column there, the at inception comments are all taken out of the original prospectus. And really interesting that at the time, it was a very unique vehicle. I think one of the first listed infrastructure vehicles anywhere before infrastructure was really a defined asset class. It was designed to give both retail and institutional investors an opportunity to invest in sort of difficult-to-replicate assets and situations and the growing importance of utilities. It was about the time New Zealand was embarking on a privatization program. Clearly, that played out in other markets very successfully. And the objective was an absolute after tax total shareholder return vehicle. Clearly, we've delivered that with a combination of capital growth and yield. But it's been well-defined from the start. We've, I think, had a very consistent approach over a very long period of time, 27 years. And we're proud to be here today, right, from a $50 million initial float and a 20% investment in Trustpower to over now $8 billion invested in multiple sectors and jurisdictions with fantastic operating profile and development options in the future. $5.4 billion of equity market capitalization and strong high conviction thesis and renewables, data and connectivity, digital infrastructure and, I guess, broadly, social infrastructure. And also proud of the fact we've got over 3,500 employees now throughout our portfolio entities. Just -- I mean the purpose of this chart, I guess, I mean you all have this chart in front of you, and you don't need me to repeat it. But I think there's a couple of interesting observations. The first is that other than the sort of total return over 27 years at 18.9%, which we're proud of. I mean we're clearly today, targeting 13% to 15% total shareholder returns. And if we do our job right, each position we identify, each platform we build should have mitigated downside risk and unlimited upside potential. And generally speaking, we managed to extract the excess returns out of the upside business cases. And that's how you generate sort of 18%. Clearly, the last period has been affected by the takeover proposal by AusSuper. It's hard to ignore. I think what's important is that shaded period has also coincided with a very strong growth in underlying net asset values. Particularly in a couple of our portfolio entities. Canberra Data Centre is probably the most clearly identified portfolio entity that's growing most quickly in terms of its underlying asset values. And you saw there we recently announced an update an independent valuation of that entity in December. That hasn't stopped, right? That's an entity that's continuing to grow, and it's sort of hard to keep track of in some ways. We have in the middle now of a strategic review with Tilt Renewables. It's difficult to forecast where that process ends. But suffice to say, we're now very confident about the likely outcome of that process, and we think it will demonstrate what we mean by sort of upside potential when you present these types of platforms for sale. So even though you've got that big spike at the end, I think we know that net asset values are growing very strongly underneath that. Just one final set of thoughts before I hand it over to Jason. I mean if you think about now what -- and going away, I guess, from what share price represents, what is actually happening in shareholders' minds and Morrison & Co's minds. I mean we are deeply conscious of the fact that there is platform value in Infratil. And by that, we mean that once you have a strong view on an investment idea that if you can identify a management team and stable jurisdictions and then build credible development pipelines, that, in aggregate, creates platform value. So the ability to redeploy capital, generate excess returns and repeat it in multiple jurisdictions is, I think, what's been reflected largely in the underlying valuations. I guess what we need to be conscious of is that it's not every single infrastructure sector. So we talk a lot about a few renewable -- like renewable energy and digital infrastructure. We do that because it's a high conviction vehicle. And we do it because we're an active manager. So Morrison & Co supports these high-conviction ideas with specialists, mainly employees, but also outside parties that help us deliver asset management, real asset outcomes, and we're originating for new ideas every day. We had some very serious tailwinds, I guess, that are clearly supporting this type of business. We know that the attractiveness of infrastructure assets generally in the last period of time, particularly during interest rates declining has been hugely significant. We, as a reminder, though, are pointed at the more complex operationally demanding end of infrastructure, what core plus value-added infrastructure, where there's a premium on the ability to extract development gains and margins. And there's a premium also for, I guess, having flexible capital that is able to hold or sell or maintain position and time experts if necessary. I think -- so with that, I think it's not surprising that you get large sophisticated investors showing interest in the overall portfolio or the platform value, the ability to redeploy capital. We obviously have proposal from AusSuper in October. We think the Board responded appropriately and reasonably. We're prepared, I guess, for further activity, but I stress we've had no advice that there's anything other else on the horizon. In the meantime, I guess, our job is to continue to run the business as normal. And that's exactly what we did with the announcement of Jason Boyes, Chief Executive, come April 1 last week. And that's exactly what I'd like Jason to talk about next. You'll hear a bit more from me a bit later on.

Thanks, Marko. Good morning, everyone. And I'd like to start with sort of a personal thanks actually, Marko, for your support and the support of the Infratil Board in my appointment. And I think we've been working together for about a decade now, right, and I can't think of any better mentor or preparation for the role that I'll be stepping into. I think it's you and Lloyd are really hard acts to follow. But luckily, we're well positioned with a strong team that I can talk about today. So, thank you. I think it's a real shame in a lot of ways for a lot of reasons that we weren't able to celebrate your success in Auckland last night at a dinner. But I know you'll be excited to hear that we're planning a rescheduled event later in the year. So we can do that property. So good morning, everybody. I want to talk about a couple of things today. The first one is to really reaffirm our investment approach. I think that's important with a new CEO coming on board. And the second one is really to talk about how we look thinking about the outlook for the portfolio. So firstly, on investment approach, which we are summarizing on this page. As Marko said, I think one of the key things from this morning's sessions anyway is that people shouldn't expect any material change in our investment approach, being here for a decade now working on Infratil with Marko. So that shouldn't be any surprise. That means things like our target returns stay the same, our target borrowing settings, our target dividend approach, all remain materially the same. We will look to create returns by our active asset portfolio and risk management approach and using Infratil's flexible capital to do that. And what do we mean by that? It's worth digging into it a little bit. It's hard really to overstate, I think, the value of Infratil's flexible capital, which we talk about a lot, and you'll actually see it in some of the presentations today. The flexibility of our capital means that we can invest early in sectors that are less appreciated by the Infratil infrastructure investors. And you would have seen that in things like the Z Energy acquisition, but also the investment in CDC, and most recently, Qscan, which is a new sector for infrastructure investors. It should enable us to have -- we have no real fixed investment horizon or no strict yield requirements, which is a really important differentiator from other investors in this space that enables us to invest in businesses that have long-term growth outlook that might have transition risks that need to be managed. And as a real key factor in how we attracted management teams like Paul Gaynor at Longroad, you will hear from him soon. And Ingmar Wilhelm from Galileo, who are used to other types of capital that have fixed investment horizons that they see as holding them back from creating long-term value or working for strategic investors that have strategic reasons for running their businesses that are not necessarily aligned with creating long-term value. So we're not obsessed with perhaps like an industrial generator of adding megawatts to our portfolio. And perhaps we're not like a global telco company like Vodafone, who has group-wide global views on their investment business that would hold back, say, a local team from optimizing the situation in New Zealand. So I think that's really what we mean about flexible capital and why it creates or enables us to create value. The types of investments we look for have sort of 3 or 4 key characteristics within that theme. They will have a strong defensive characteristics that underwrites a return in that kind of mid- to high single digit internal rate of return range. And we saw that in CDC, for example, we got a lot of comfort from CDCs unique at the time, I think, connection to that fiber network in Canberra, but also the high costs of relocating out of their facilities. We also see it in Qscan, for example, with the scarcity of expert radiologists who provide the services they provide. So we look for those defensive characteristics. We also look for exposure to long-term growth trends, which enable us to invest capital to achieve our real target return range, which is more in that high to -- that mid- to high teens internal rate of return through investing in these things behind those long-term investment trends. And I mean you see this in Tilt as a bit of a classic with all the focus on renewable energy development. So they -- when they built the Dundonnell wind farm, they raised equity from us, which we happily contributed to. When more recently, they sold their Snowtown 2 wind farm to fund the latest development. So there's options and ways that they can reinvest capital to create that excess return. CDC clearly has a very long pipeline of data center build ahead of it. And we're able to invest new capital to help Greg and the team, say buy land like they did in Sydney or able to let him reinvest his own cash flow to build out his pipeline. And that's really the essence of what we call a platform business and why we like them so much because their ability to take capital over time because they are in sectors that are continuing to grow. The other few things we look for are scale now really. We're conscious that can't -- it needs to be meaningful in the Infratil portfolio to have an impact. And so when we look at something like Qscan, while it is a meaningful investment in absolute terms -- in relative terms to the Infratil portfolio. There's no doubt that we're keen to continue to invest in that theme to make it meaningful in what is now, as Marko said, an $8 billion portfolio. And -- but all of that means that a lot of the sectors we're in tend to be what we call ideas that matter. Sectors that have a real societal impact and role to play, and which we're really conscious of. And the last really important thing is obviously an aligned management team. So we look at businesses where we don't see that, and we are attracted to businesses where we see it, management teams that are interested in using our flexible capital essentially to create long-term value in the sectors they're in. That's a sort of a checklist. If we do our job well today, I think you'll see that characteristic in all the presentations. A couple of kind of riders to that, I think, are important to mention that we're really conscious that there's only so many sectors you can run in a portfolio before Infratil gets too complex. And that's why we're focused around the 3 sectors really, Marko talked about before, decarbonization or renewable energy, connectivity, digital infrastructure, and we call it and really social infrastructure, the latest element of that is health care. We're also confident that the flexibility of Infratil's capital was really kind of underwritten or provided by lower risk assets, Tilt's operating wind farms, Trustpower and certainly pre-pandemic Wellington Airport. And so we know we need to keep balance in the portfolio to retain that, that what we think is a competitive advantage. And we're also mindful, although we are a total return investor, we are mindful that a number of our shareholders do rely on the dividend for their own means. So we do have that in mind. I think that is all I really wanted to say. Here, there was one -- actually, other point, I think is important is we are quite conscious custodians at a lot of the assets we have. As I said, they do perform. They tend to perform an important societal role. We're mindful of the impact they have on their communities, and in particular, the impact they can have if they're managed badly. So that is at the forefront of our minds. That's hopefully on the first that I wanted to cover. Hopefully, it's really familiar territory, but I think it is worth restating with the changes coming up. And if we do our job well, you should see those characteristics across the portfolio today. I want to move to the second topic. Looking at the -- how we're looking at thinking about the outlook of the portfolio. I think key message over this couple of slides is that we are really confident about the opportunities we see ahead of us to continue to invest at attractive returns, particularly in the 3 sectors we've talked about already. So that's the key message. I think that's really important, particularly in the context of the strategic review of Tilt and Trustpower strategic review that they announced as well. We announced that strategic review around Tilt last year because of not only the interest we saw in Tilt, but also globally in quality, high-quality renewable development platforms. And as Marko said, we're really pleased that, that has now translated into what appears to be a competitive process. We don't know the outcome of that, and that's still weeks away. But you can be assured that we've been thinking in quite a lot of detail about how to reinvest those proceeds if it's decided to sell. Tilt, let me talk about that a bit more now. One of the really tricky things, if not the trickiest thing in this business is timing, when you're going to receive capital or have capital available when the investment ideas are available to invest in. One of the things, that's why we like platforms so much what I talked about before because often, the timing of your capital, you can see a long time in advance, and you have a little ability to control it. The other value, I think, of the platforms is it has enabled Morrison & Co to build world-class internal capability in these sectors, and you'll hear from some of those people speaking today. As Marko said, we're well over 100 people now. And myself, I have been spending the last 18 months working with our European team to build and open that office, which is now nearly a dozen people based in Europe. A lot of them are from Europe, and focused on European investments, including Galileo Green Energy, which you'll hear from. That gives us a much bigger lens on a much bigger market or set of opportunities in the sectors we've identified. Let me talk through a few of those now. I want to start with decarbonization, we call it on this slide or renewable energy and Trustpower. We're a big supporter of Trustpower's strategic review they announced. We don't know what the outcome of that will be either. But I think regardless, we feel that, that will give -- will result in Infratil having more flexibility around its investment in Trustpower than we may have had in the past. And I don't just mean reviewing that stake at all, I think there will be interesting opportunities for Infratil to consider increasing its investment in that space and supporting New Zealand's decarbonization efforts. That's not a decision we need to make today or tomorrow, but it's coming and we're preparing. Turning then to Longroad and Galileo. Remember, those are our businesses that build renewable energy projects, essentially wind and solar farms. In the case of Longroad in the U.S. and Galileo in Europe. I'm the Chair of both of those businesses, and you'll hear from the CEOs soon. But as we said last year around our equity raise, we see a steady stream, really, of opportunities to accelerate and scale those businesses as those really vast energy markets continue to transition their energy systems to meet their Paris Accord targets or even, in some cases, exceed them. What those opportunities look like are in a couple of areas. One thing we are seeing a lot of is opportunities to work with maybe less well-capitalized developers in those markets or developers who are missing specific capabilities needed to unlock their projects. And either work with them to develop their projects or acquire those projects off them, and you'll hear a few examples of that later on. We're also seeing opportunities and Longroad's doing this at the moment to build and market -- diversify portfolios of wind and solar farms to their long-term investors, pension funds and the like, they like to buy these, which is more attractive to them than single assets because of the diversified nature of it. But it does require Longroad to hold for a while, all or some of the projects that they're building while we build that portfolio for them. This is a couple of the opportunities we're seeing. There are obviously new technologies emerging in those markets around batteries and offshore wind that will get early exposure too through those platforms as well. The last point I wanted to make on this sector is that we're also looking at new jurisdictions to extend that successful Longroad and Galileo model. And then Vimal Vallabh, our global Head of Energy will talk about that a bit in a second as well. Let me turn to what we call on this slide connectivity or digital infrastructure. These are telecommunications assets essentially. We clearly, we're really supportive of Greg Boorer and Jason Paris' plans to grow CDC and Vodafone, respectively, and you'll hear about those later, and we expect those to throw up reinvestment opportunities. What we are working -- have been working on at Morrison & Co for some time is how can we build on the beachhead we have with those investments in other jurisdictions. That's likely to be a separate investment from those assets. But clearly, we have capability and track record that makes us credible in those spaces. We've spent a bit of time looking at global data center opportunities. And clearly, that's an incredibly hot space with a lot of capital chasing the same number of investments. What we have started seeing overseas in much bigger markets is niche is appearing in data center markets where there are players who are specializing in particular types of data centers, whether they're focused on things like high-performance computing, where customers have specific cooling and power needs or edge computing, where people need to be closer to certain locations. And we're seeing interesting opportunities emerge to partner with developers in these spaces and almost Longroad-like models, where you can provide development capital, which is hard for them to find. But large amounts of capital and not really put at risk until you are confident that the data center asset that they're looking at is able to be built out. So that's a set of opportunities we've been looking at. We've also been looking at the fiber space. These are companies that build or have large terrestrial so on land or subsea fiber networks. These businesses are really competitive as well. We have found those are really hot investment space. They -- we tend to look for market structures that give us comfort that those businesses will be able to reap the benefits or some benefits from the massive growth in traffic that they're seeing over their networks. And that was a key requirement of our investment in Vodafone last year. These investments also tend to come with large transition or transformation programs, whether that's aimed at creating a more efficient business or unlocking an ability to separate retail from wholesale and focus on network services. Those things are not for all investors as well. We are looking at the space. Again, it's very competitive, but I wanted to give you an idea of a couple of areas where we see opportunity today. Now let me stand back a little bit from that. That can all sound a bit exciting, but I wanted to reassure people that we are not throwing out a decade and more of investment discipline with this changeover. We are not going to bet the farm on any of these investments, and we're not getting ahead of ourselves on anything. I really do just want to lay out clearly the types of things we're looking at and the way we're thinking about them. So hopefully, you'll get that sense today. Okay. Just a couple of more topics to come. Phillippa, you're going to pick up Wellington Airport and RetireAustralia later on. I do want to mention quickly health care. We think this has as high potential as renewable and digital infrastructure in the long term. We're excited about our investment in Qscan and looking forward to supporting that management team. Realize their vision really of a modern, digitally enabled diagnostic imaging business. You'll hear from Paul and Chris later on. I think the presentation does a really great job of outlining the investment opportunities in that space. So I won't double up on that here. I do want to mention we continue our early research into early areas of interest. There's nothing to call out here today. But it's really important so that we can continue to position Infratil early in the areas. And it's great to see health care, which has been on these slides for a few years, right, graduate into an active sector for us. Let me wrap up my section there. If anything, just take away 2 key messages from this that there are no material changes expected in Infratil's investment approach. And we are really upbeat about our ability to continue to invest in the key sectors we've been talking about for a while, going forward at attractive returns. I think there'll be opportunity to do some questions at the end. So I'll hand over to Phillippa now who's going to talk about the composition of the portfolio.

Thanks, Jason. Good morning, everybody. Nice to be here, and apologies that we're doing this fully virtual, but I'm sure we'll make the most of it. Just really following on from where Jason has been talking about how it is that we've developed these platforms and what our high conviction sort of looks like. I think looking at these pie charts, it would be easy to sort of think, well, it must be pretty straightforward to get into this position. But I think one thing that you can see through this is we've got a very heavy emphasis on renewable energy, and we've also become very well established in digital infrastructure. What that has meant really is that we've -- interestingly, if you think about the way we've evolved into that position as we started out with CDC back in 2016, that investment was about AUD 400 million. Roll forward to FY '21 and our investment in digital infrastructure from a kind of equity value point of view has now ballooned to like $2.7 billion. So to move from that has been a very purposeful move. It's not something that we undertook by accident. We acquired Vodafone in 2019. And as you're all aware, our investment in CDC has gone from strength to strength, both from a relative value perspective, but also in the investment that it's made in its data centers and the sort of significant growth that we've seen through that investment. So at the same time, though, we've added another sector into the mix. We've got the 8% that we're showing there for Qscan. We were very pleased to complete that acquisition in December. That complements what we call our social infrastructure platform, which we have RetireAustralia in, and I'll talk to that a little bit later. So really, the other thing I think I would focus on is if you went back to 2016, our main investment in renewable energy would have been Trustpower. That really has moved quite significantly in terms of the states we've got in that portfolio now. We've got Trustpower, Tilt, which Jason has spoken to earlier. We've also got Longroad, and we've also got Galileo Green Energy. So these really are very purposeful moves to think about, a, where we want to emphasize our investment and also through what geographies. So yes, the pie charts themselves look pretty simple. But then we can sort of move and think about, well, how is it that you manage that from a portfolio context. So we are very heavily weighted towards Australia and New Zealand in terms of our geographic exposure. But I think it's worth noting that the investment that we have in Longroad in the U.S., while it might look like a relatively small sliver in that pie chart, that really does not represent the amount of activity that, that team generates and the development that's underway in that platform. So it looks like a relatively small part, but there's a significant amount of activity, and Paul Gaynor will speak to that later in the day. Then you need to really switch to how it is that we manage those portfolio investments and targeting our 11% to 15% sort of 10-year average return per annum. And that also, to a degree, is an element of gymnastics. I mean it's not quite as straightforward as saying that each part of the portfolio only operates in one particular sort of target return. A good example of that would be both CDC and Tilt. They've got operating assets, which see generating more like a core, core plus return. But at the same time, they've got significant development activity, which are generating returns well in excess of that. So what we do from a portfolio perspective, as we look at those assets, we -- beg you pardon, those investments, we take a view on what that forecast position is for each asset. And then we see whether or not we're comfortable that's going to be able to generate the targeted returns that we're looking for. And as you can imagine, that also has to have regard for our capital structure. So we've got a level of wholly owned group debt through both our bank and bond facilities. We want to be able to clearly have a comfortable level of debt so that we can service that. And that needs to be able to be achieved even when we're talking about adverse capital -- beg your pardon, adverse economic cycles. So -- and I think the pandemic in the calendar year 2020 has been a good example of that, which I'll talk through a little bit later. But overall, really, what we're looking to achieve is a wholly owned good cash flow that can support that debt, support investment in those platforms and obviously provide an adequate opportunity to shareholders in terms of dividends. So I'll turn now to the next slide. And as Jason said, I'm just going to couple of briefly Wellington Airport and RetireAustralia. And the impact of the pandemic on those assets and Infratil's ability to support those assets, I think, is a very good example of the benefits of the -- both the sector and the jurisdictional diversification that we have. Really, Wellington Airport and RetireAustralia were impacted, as you would expect, quite differently by the pandemic. Wellington Airport had a significant revenue shock as the country went into a level 4 lockdown and its locked down, including, I gather, the one that's obviously going on right now has a consequential impact on the revenues of that operation. In contrast, RetireAustralia, the main focus of that business has and continues to be the health and well being of the residents in the 27 villages that we operate in Australia. And that's across various -- the 3 main states that it operates. And so it's an area of focus and it had to be rapidly moving as each state of Australia has gone in and out of lockdowns or has had hot spots. But I think overall, it's comforting to know that both of those assets have come through the first sort of 9 months of FY '21, really in a way that is much better than any of us, I think, would have expected. In the case of RetireAustralia, that sector has actually had resales demand that's now outstripping what we saw in FY '20. And we are now forecasting that the resales within that group will be actually more than the FY '21 sales of 300. So that's a great place for us to be. But I think overall, it's also commendable that we've managed to navigate that period without a single COVID outbreak or case of COVID within those communities. And when I look at Wellington Airport and reflect on the way in which that business has met the challenge. Clearly, there's had to be a significant amount of cost cutting and CapEx curtailment, while we had to reassess the sort of capital outlook for that business. But to never let a crisis go amiss, we've also had a look at what the opportunities might be to grow capacity in a post-COVID world and what new routes the airport could be exploring. I think it's fair to say that airlines all around the world will be relooking at their activities, and Wellington Airport wants to make sure that it's well placed to respond to that where it can. But at the same time, we've also done things like taking the opportunity to resurface the runway while the international passenger traffic -- beg your pardon, airline traffic hasn't been there in the kind of late hours of the evening, which is what we're normally accustomed to in Wellington. So we still got a little bit to go in terms of weathering this pandemic. But I think -- so we're not making any assumptions in that regard. But it is really pleasing to see how both of those investments have responded. And also interesting to see that neither have required the capital commitments that Infratil and it's co-shareholders had committed to at the beginning. So generally, a good position there. So really following on from that, I'll just go back to our FY '21 guidance. So you may recall that we initially issued guidance around the time of our half year result that had been a little bit later than usual, given the ongoing impacts of COVID and the uncertainty that they presented. The guidance that we provided at the half year was $430 million to $470 million, and we're now narrowing that range slightly to $440 million to $470 million. That also includes a 3-month contribution from Qscan. So -- and we've also just noted the guidance -- the components of the guidance at the 100% level. So you can see the -- what the larger contributions to that guidance range are. Then I wanted to just also provide a bit of an update on incentive fees. You may recall that we initially made an accrual of incentive fees as part of our half year. And then with the revaluation of our investment in CDC, which occurred at December 31, we also updated that guidance to an accrual of an incentive fee of $147 million. Now what we noted at the time was that we had not updated our assessment of performance fees in relation to Tilt Renewables. As Jason has spoken to, we're well underway with our strategic review of our investment in Tilt. So as at December 31, we really didn't take a position on that. What we've got to is that the Infratil independent directors in Morrison & Co are going to agree an undisturbed valuation for their investment in Tilt Renewables. And that undisturbed valuation will be applied so the purposes of determining the annual incentive fee accrual at March 31, 2021. Now the rationale for that approach is, as you can appreciate, we've got a strategic review, which is well underway. It is very unlikely and probably not an achievable feat in anyone's terms to complete this -- any transaction if it was to occur by 31 March of this year. As you'll appreciate, there's very likely to be regulatory approvals required for that. And we don't want to get too far ahead of ourselves in terms of any expectation of -- or assumption of how that transaction will proceed. So on that basis, we've taken the view and discussed with the independent directors that the best approach is ahead of this undisturbed valuation. And we'll provide more information on that as we get closer to year-end. So then really, just to note that, as you'd expect, the balance of the international assets that are eligible for incentive fees will be undertaking an independent valuation at March 31. And again, that's just a usual cost, as you've seen in recent years. So then just really a final slide for me and a look at our debt capacity and liquidity. We actually have had quite a lot of activity in the last 6 months. We completed the acquisition of Qscan, which all but applied the equity raise that we had undertaken at June 30. We've also opened a tap issue of our Infratil 300 bonds. The first close of that actually went quite well. We were very pleased with the surface sort of $50 million that we raised on that in December, and that bond remains open. We've also just completed a refinancing of a $32 million bank facility, which was maturing this month, and we're well underway with our discussions on the next bank maturity, which is forecast for June. So really all up where that leaves us is probably where we expected to be, even on a pre-Qscan basis, we've got available debt facilities of $338 million at the wholly owned group. And given the movement in our market cap over the last few months, we've also now shifted to a gearing level of a relatively lower threshold of sort of 24%. Just really speaking to what that means for us. That does mean that we do have capital that we can apply to meet our existing commitments and to support those new platforms. We clearly need to be mindful of the way in which we deploy that capital so that we can manage our debt position prudently. But we've got a good forecast view on that, and we see that as giving us the flexibility that we need at this stage. So I think that's about it for me now, and I'll pass it back to you, Jason -- or is it Marko?

Yes.

Good, here you go.

So thank you, Phillippa. Thank you, Jason, for that, I think, pretty tight summary of Infratil's current position, model and the way we are thinking about our future prospects, both of our existing platforms and also our ability to originate new ideas. I mean I said at very start that our job is to focus on business as usual, notwithstanding interest from external parties. I think you can hopefully appreciate business as usual for us is actually relatively complex exercise. It requires a huge amount of thought and planning and trust in our sort of senior executive teams inside the portfolio entities. And you're going to see that when you hear them talk later in the day. We've also got a strong Morrison & Co team behind Phillippa and Jason and myself. Vimal Vallabh, who will introduce Energy business -- our global Head of Energy-based in Auckland, but soon to be based in Europe when the circumstances allow. Paul Newfield, our Head of ANZ business based in Sydney. He's going to talk to you about the health care opportunity in Qscan, in particular. And Will Smales also based in Sydney, our new Global Head of Private Markets. He'll be talking to you about digital infrastructure, and introducing Greg Boorer and Jason Paris. So for us, I mean that last slide talks about a unique portfolio. I mean I know that there are -- you will be sitting on this call thinking, okay, what exactly is unique about it? And how do you value it? I think some of the unique aspects are about the consistency and investment approach since 1994. Obviously, the ability to generate high absolute returns. The uniqueness, I think, is that in the real asset environment, the combination of quality management, access to capital and real credible near-term development pipeline creates a lot of financial value and economic upside for businesses like us and for shareholders alike. I think what's been unique, perhaps has been the ability to actively manage that portfolio. So today, we have, I think, quite a nice balance of core defendable, predictable cash flows, particularly in our New Zealand businesses and strong growth prospects, which tend to be largely in our international markets. But that balance changes over time. And even with the review that's happening right now with Tilt or the review that's happening with the retail base and Trustpower, we would constantly check and perform scenario tests on what the portfolio looks like post those sort of outcomes. So there's a rebounding that happens all the time. It's a very actively -- so not only are the assets actively managed, by real asset experts, but also the portfolio is actively managed, both on the capital structure and on the balance of risk between core+ and development profiles. We are benefiting, I think, from being in the right place at the right time, but probably could have said that at any stage over the last 10 or 15 years, right? So this is an extended period of time where societies, at least every developed and developing market is requiring access to infrastructure capability and capital. So if we talked about nothing else but greenfield requirements for infrastructure, we would fill our boots, I think, with applying our capital and our people to the best set of greenfield ideas and whether that was working with public entities, local and central governments or not. I think we would be confident about deploying capital against the greenfield opportunity. The reality is today, it's dominated still by trading of brownfield assets. And that's particularly as brownfield assets or existing real assets work their way through different risk profiles from development assets to core+ exposures to, I guess, enhanced core exposures. And again, any real business, real asset business with people, with regulators, with competitors, with growth prospects, with threats and opportunities, provided they're in a decent industry structure, I think we're confident again of being competitive in those sort of market opportunities. And we're confident because it requires active capability. And I think we've all heard about the wall of capital and infrastructure. But what you don't -- there's not a wall of investment managers. It's a very thin market when you get into operationally complex and development type assets and exposures, particularly in certain sectors like renewables. And I think digital infrastructure today, Infratil would stand out as a principal investor globally. One final set of thoughts before we ask for Q&A. And again, as a reminder, please pass-through questions if you do have questions at this stage at some high-level portfolio analysis before we get into the individual assets. I mean we've -- back to just one final set of comments around the takeover proposal. I mean we were heartened as a group by the response from retail and institutional investors. And so just to be clear, this is a process that's run by Mark Tume, the Chair of the Board and the independent directors, not Morrison & Co. But I think the Infratil independent directors and a large proportion of our investor base buys the fact this a unique portfolio that is incredibly valuable, particularly when you look out into the future. And their ability to redeploy and continue to generate excess returns demonstrates that there's a material undervaluation, I think, potentially of what this set of assets and these sets of ideas are actually worth. We are crystal clear that in making that statement, we are on the hook for demonstrating that value in the future. So make no doubt about -- we are clear that, that is the case. And we could not be more confident that we can demonstrate that value and that we can redeploy capital above our hurdles and above your hurdles, even more importantly. So I think that's important to emphasize. We're not taking these sort of approaches lightly. As I said earlier, we have no idea what is planned next. Our job is to actually focus on maximizing the performance of our individual assets and to optimize the portfolio. And hopefully, you'll hear that today. And just one final message from me. I mean I appreciate the comments from Jason. As I said earlier, I could not feel more confident either of the person I'm handing the Chief Executive role over to. So Jason, with strong intellectual background, I think, complete and thorough understanding of the portfolio and the full support of the Morrison team and Board, it's got great things to look forward to. So with that, we should take some questions. I know we've got a little bit of time. What have you got there Flesh?

We've got 10 minutes, just under 10 minutes before we move onto the businesses themself. So good morning, everyone. If you do have questions, you could submit them online. And even if you've got questions around some of the businesses late in the day, we're going to collect those and have prepared some through already, which is helpful. So maybe if I just keep it at a high level, we've got a couple of questions. First off, and maybe I'll direct the first one to Phillippa is around Tilt. And if you could explain what an undisturbed valuation is?

Yes, sure. Thanks, Mark. So yes, really, we have thought about this, but the concept of an undisturbed valuation is to really try to think about what the value of Tilt was prior to the announcement of the strategic review. I think if you talk -- and there was not necessarily a science to that. So there will be an element of valuations by themselves though as much are not exactly a science in themselves anyway. So -- but the idea is to try to capture the value of Tilt to reflect the progress that it had made since our half year announcement. So clearly, Tilt itself is not so still. It's made significant progress with its Rye Park. It announced that Dundonnell had got 2 full -- beg you pardon, to full production. And more recently, it even announced the completion of its Waipipi turbines. So really, what we are saying is that we do want to reflect the values that demonstrates the progress that Tilt has made. But not necessarily with the overlay of what is a very live strategic review and which may or may not culminate in the realization of that investment. So just to be clear, what that means is that Tilt Renewables will need to be assessed as part of the annual incentive fee at March 31, 2021. That is what the undisturbed valuation will be used for. The consequences of that is that, that fee is payable in 3 tranches. And in the event that a realization subsequently occurs, then there will be a -- effectively a washup being the difference between the March 31 valuation and any final sales price to determine the realization incentive fee.

Great. Sorry, that was Phil Campbell from UBS. A question from Nevill Gluyas from Jarden. So if the Tilt process resulted in a sale, would Infratil reinvest focus for those proceeds beyond the existing platforms or use them as an opportunity to seek to invest in one or more other sectors identified, so Marko. .

Yes. The -- it's -- you can run the math, right, on potential sale of Tilt proceeds, they're significant. I think Phil Campbell and his recent report had them in excess of $1.5 billion, and that's, I think, a reasonably conservative starting point. So we recognize that quantum of capital is significant. And as I said earlier, in both my presentation and heard from Jason, we're confident we can deploy it. Its existing platforms can always be accelerated. And particularly in some of those scaled markets like United States and Europe, where there is no shortage of opportunities, I think you'll hear from Paul Gaynor and Ingmar, and there's no doubt you can deploy that capital. I think closer to some of the new areas like digital infrastructure, this is probably the fastest-growing financial subsector of infrastructure. And both 5G data centers, terrestrial and submarine cable investments, progressing at significant rates across just about all developed and developing markets. So I like the sort of the idea that Jason was referring to that you can identify a market with decent industry structure and a management team that can create sort of a Longroad spot vehicle for deploying capital into further digital infrastructure. So yes, we'd be really confident. I think Jason?

Yes. We mean to that. I agree?

Thank you. A wealth adviser question here to direct to Phil. You mentioned in the overview around to pick up an activity in RetireAustralia, what's driving that?

Yes. So we think that actually what's driving that is the residents or our potential residents have actually been very heartened by the responses within that sector. And I think RetireAustralia is an excellent example of that. So what it means is that really contrary to what many sort of pundits might have thought at the beginning of the pandemic rather than it creating challenges for that sector, people have actually looked at retirement villages is safe havens, is communities where they can feel supported. So the way that, that's translated is effectively a significant increase in inquiries, a lot more deposits being placed on. And I think this is really consistent with what we've seen in the New Zealand sector as well. So that's what I mean by an uptick in the activity. The other thing to draw out on that is, it shouldn't be lost that they've had to respond to that increased demand at a time when they're also having to go in and out of various hotspots within Australia. So it is commendable that they've been able to reach those resales that they have, but also keep the residents safe.

Okay. Just a follow-up question for you, Jason, and it's on a few people's minds. Just wondering if you could give an update on what you expect the Tilt's timetable might be or whether you had any indication on the status of that?

I think we expect to have a solid update on that before the end of our financial year. That's what we can give you.

So this one is a bit of a deeper dive then. And it's a specific question on how Infratil can add value in AI and robotics, which is probably a sub-point on one of the slides, but perhaps an intro to how you see Infratil investing in next-generation infrastructure or emerging markets as we have done?

Yes. It's a good question, and Matt's been on that slide for quite a while now, right, which I think really reflects that we've continued early research in those sectors for quite a while. We have actually invested -- there's a reference on that slide to Clear Vision, which is a sort of a venture capital fund, which was looking at the infrastructure applications of new technologies based out of San Francisco and it's actually had quite a good investment in EV charging, but has been a hard, I think, harder, I think, in that kind of AI space to find the right investment model there, where our capital could be useful. So I think it's a good question, and that's kind of almost exactly what we're looking for in those new sectors as where is a business model that can benefit from our capital. And to be fair to say, I don't think we've seen it in that kind of AI robotics here. Except in one area, which really is in the data center business and energy is an offshoot. We're seeing measured volume uptick in those data centers in some cases, driven by sort of cloud architecture behind some of these AI applications, which then also requires power that we're seeing in the U.S. turning into revenue contracts for our wind farms and solar farms. So that's kind of the extent of our exposure at the moment, but we'll keep them looking.

Thanks, Jason. A follow-up question for you. Any planned changes in running in Infratil despite no change in strategy?

No. No planned changes in running Infratil at the moment. I think, hopefully, there will be more opportunity, obviously, later in the year to talk a little bit about -- to observe a little bit about our kind of personal style. I think we are doing quite a bit more work around our responsible investment approach, and we're hoping later in the year to talk in a more structured way about something that's part of our DNA, but we know that's professionalizing a lot in our space.

Thank you. That brings us probably at the end of the high-level questions. We've got a number of comments here about the businesses, which we might cover off as we go through each of those businesses and hear from the CEOs. So thank you for those questions.

So we now move to the next stage of the presentations where we're going to hear from firstly, the heads of each of our areas of Morrison & Co do a quick introduction into [pharmatics ] and why we think they're important, and then we're going to follow in the first sessions with -- around renewables. So I'd like to introduce Vimal Vallabh, who's our global Head of Energy here at Morrison & Co. Some of you will know him. We're lucky to have him in New Zealand at the moment. He spent the last few years traveling the globe and he's been very instrumental in the establishment of Longroad and more lately, Galileo and as Marko said, he will be relocating to Europe to assist with that. So welcome, Vimal.

Thank you, Mark, and good morning to everybody. It's a pleasure to be here today and to talk to you about a sector that's very close to my heart, renewable energy. Maybe if we can turn to the first slide. Renewables, Morrison & Co has been in the renewable sector for 27 years, starting with its investment in Trustpower. And it represents a lot of early thinking for the business and quite a strong component of our renewables business. Renewables does present one of the largest investment opportunities I think we're going to see in our lifetimes with an expectation of at least $4 trillion over the next decade being put into the space around the world. And it's pretty hard not to get excited about what that means for investors to take advantage of these opportunities that markets are producing. And I don't think we've seen anything like this in the energy sector for at least a century. With the transformation that oil had on society at the turn of the 20th Century, I would equate this to the -- to that and the seismic impact that it's going to have. We'd been fortunate to be in this space early and benefit from some of the tailwinds that the sector has experience, particularly over the last 5 or 6 years as the impact of climate change becomes more embedded in the social fabric that we operate within. But also the importance that renewables plays in energy security for a lot of countries and the improvement in geopolitical risk that, that represents. It has also, over the last 20 years that I've been involved in it had quite a change in the economics. And it has become an economic imperative for a lot of countries. And the marginal cost of supply for particularly wind and solar is now in many markets, competing with traditional sources of energy generation or electricity generation. But we're also seeing a seismic shift in the use of NG in the sector with movements to electrification, with transportation, with heating, and a lot of industrial processes. And all these factors combined give us these tailwinds with governments reacting and responding accordingly. But one thing to recognize about the sector is that a lot of these changes are happening over time. Different markets will transform at different speeds and with different levels of conviction, and we see quite a lot of contrast across the world as we make this move. We began building our platforms in the sector back in 2016. With a view very much to allow us to look across multiple markets and invest in multiple markets simultaneously. And keep capital in these markets at any -- access these markets at any particular point in time. And one thing we did know going into these markets is how do we differentiate our capital and what was becoming a competitive landscape. And I think Jason talked about this earlier with regards to our flexible capital. And if I apply that principle to what we've done in renewables, we very much focus on deploying capital in its most optimum form across the value chain for renewables. But that also equates to different technologies, different geographies and different life cycles. And that allows us to optimize the returns that we get from the capital that's been put into these sectors, but it also allows our management teams to focus on development and not necessarily also look for capital, equity capital for their projects. And so we've been very fortunate in partnering with some of the leading executives and management teams in our respective markets. You'll hear from Paul Gaynor, who has been in the sector for over 20 years. And Ingmar, who's been in the energy sector for over 30 years, both with deep experience in renewables and leaders in their respective geographies they cover. So we've been very fortunate to have done that. We also, as Jason talked about, participated in Tilt, and we've seen the benefits of that journey that Tilt's had over the last 4, 5 years. And we've taken a lot of those learnings and apply them to our other platforms as we work closely as they build that out. We're now turning our attention to Asia, which is quite an exciting market for different reasons. It has a strong growth characteristic to it. Less dependence on decarbonization and more about populations getting electricity. And I -- it's quite an exciting time for us to be expanding into that geography. So I'd like to hand over to Ingmar to talk about Galileo in Europe and the renewables that's happening in that space. And Ingmar.

Yes. Thank you very much, Vimal. It's really a pleasure to be speaking to you this morning here from Paris. My name is Ingmar Wilhelm, I'm CEO of Galileo Green Energy. And this is the platform that I'm so happy we've put in place just a year ago together with the team of Morrison. Now what is this platform about? It is effectively targeting very large market, the whole of Europe. And here we are at the start of a new chapter. Why? Because renewables are just about to shift from an add-on energy to become the mainstream technology solution for our energy mix. And on top of that, and of course, further accelerating this transition is the fact, as Vimal said, that the energies, the technologies are effectively now becoming cost-competitive. So it is no longer a question whether they will enter the mix because incentives are needed, but they are now really competitive and are at an even level to the prevailing prices on the market. Now in order to tap into this opportunity, it requires specific competencies. And this is what we are building, Galileo Green Energy on. We are convinced that there is a specific mix of competencies that will allow us to fully unlock the potential and participate in this very, very large market. After 1 year that we are working on the platform, Galileo Green Energy, I think it is fair to say that we are now addressing the first level of diversification, both in terms of markets and in terms of technologies, and I'm very happy now to introduce you to this large opportunity. On the first page, you can see -- yes, the main themes that I would like to share with you, Europe as a market and renewables playing in it, our investment thesis and also our positioning in that market. What we have achieved after 1 year? And what are the development perspectives going forward? Renewable energies, as you can see on the following page, do cover all 4 key parameters for a good energy mix. They are secure; they are affordable now because they're competitive; they are widely accepted by the people across Europe and no doubt about it, they are very sustainable as well. Europe is a large market, 500 million people. There are over 30 countries so we are speaking about geographical Europe. It is the European Union, yes, but it is also the U.K. It is also Switzerland. It is Norway and a couple of additional countries from Eastern Europe. The power market is over 3,000 terawatt hours large. There are 300 million customers overall and roughly 20% of them are business customers. Policy is, of course, a driving force. We started almost 20 years ago ahead of many continents. The European was convinced that there was something to be done about the emissions. And yes, it has led to agreement that we all know of. So there is very strong support from the policy agenda of the European Union. Fair to say that in terms of regulation, so the translation of EU policy into state laws and then into regional laws, sometimes there is a bit further streamlining to be done. However, the performance of the overall market is a good -- is at a good level. Now we have increased our targets for the year 2030 to reductions as large as 55% compared to 1990 before that level was 40%. And therefore, if we now take these new targets as our aim then we are effectively undersupplying new projects. And so in this market, there is a rate of growth that you can see on the next page, a rate of growth of renewables. On the left-hand side, you see the green part of these bars, the green part is representing the renewable energies in the European power mix. And their share is foreseen to increase by roughly 100 terawatt hours of additional energy to be produced every year until the end of this decade. And currently, in 2020, we added across 50 terawatt hours, so half of this amount. It is clear that much more needs to be done. And again, this is, of course, an opportunity for people like ourselves. Translating this into capacities, this is what you see on the right-hand side. There are roughly 500 gigawatts of new renewable capacities necessary in order to come up with the objective to reach 55% of reduction in terms of emissions. In order to unlock this potential, this very large potential, we need competencies. And this is what Galileo Green Energy is about right from the start. You can see it on the following page. Participating in this market requires, first of all, that the projects you develop are competitive projects because you no longer can make reference to an incentive level somewhere, but you're exposed to a competitive environment, be that because you are participating in an auction, or be it because you are competing in front of an energy consumer with your power purchase proposal. Commercialization, and I already mentioned it, is the second component. Not only do we need to be good developers, we need to be good marketeers, salespeople of our product. And this understanding of clients, again, is something that is not common to, would say the developers of the last decade. The commercial attitude and the understanding of an energy profile and what it takes to supply fully a client, this is the second competence that we are building here at Galileo Green Energy. Thirdly, because the production profile of renewables is evidently different from most of the consumption profiles of consumers, you need to be able to manage the position on the energy market. Energy management is, therefore, the third competence that we are building. And as the offtake solution, again, is not a 20 years state-guaranteed offtake scheme, but it is now a mixture of a PPA of a certain tenor, perhaps a second PPA of another tenor, different price formulas to certain exposure also to the underlying energy market, and therefore, the financing of these types of offtake solutions is again something that requires attention and innovation. And these 4 competencies are the pillars on which we are building Galileo Green Energy. Now there are, of course, competitors, and you could say, well, they are doing similar things, in particular, the utilities. Well, that is true. However, it is also fair to say that in this condense way and applying these competencies swiftly to specific opportunities. So because of a combination of speed of action, and an entrepreneurial approach, I think we are well placed to compete with utilities. Likewise, we are well placed to compete with the sector specialists, which are normally developers covering well past the first part, competitive development, but not the other competencies that we see in the mix, and this is how we position ourselves. And this is also the basis on which we have then grounded our investment thesis that you see on the following page. Value creation through a competence driven and fast-moving development of flexibly financed projects. We are concentrating on greenfield projects, in an expanding market that has to come from the 50 terawatt hours of today to 100 terawatt hours per year. We mitigate our risks through geographies and technologies. And this mix is very valid. There are over 30 countries that we can invest into. There are at least 4 technologies that are part of our mix, mature technologies that is solar PV, wind onshore, wind offshore and also storage. All 4 are part of our mix. And this combination of countries and technologies is, in fact, the best mitigation strategy against risks that you may have in one specific country or situation. Now on this thesis, we're building a pan-European multi-technology renewable energy developer. We are also foreseeing to own some of the plants and to operate them. We will be applying our competencies, I think, that is evident. And then we will be delivering competitive green energy solutions, in particular, also to customers, right? So there will be outstanding in the market because they have been accepted by clients as a viable long-term solution for their energy needs, green energy needs, of course in our specific case. And this is then the basis to realize superior returns, and we do that in particular because we enter into attractive situations early on. So the early to mid-stage phases of project development, this is where we are concentrating most of our efforts. What have we done to put this conviction to work? You can see this as an overview on the following page. At the start, we were -- yes for investors, one name for the company, I would say, a little bit Jason and myself. And so we created Galileo Green Energy almost exactly 1 year ago, with a capital commitment for development of EUR 220 million. Evergreen Capital that is supporting an open-ended renewable energy development and investment business. And we've put our headquarter in Zurich and our operational headquarter into Milano. 1 year after, we are already 16 people, 11 are working on the platform company. 5 people have already been hired by the joint ventures. We have put in place, in the meantime, there are 4 joint development agreements and effectively 2 joint ventures. The total pipeline is now above 1 gigawatt. We are addressing already 4 markets: Ireland to start with, then Sweden and the United Kingdom. And recently, we also added 2 joint development agreements in Italy. Currently, I mean during this day, we were having negotiations for opportunities in the other large markets, evidently the 6 most important markets in terms of size are on top of the agenda for us, and that is in addition to Italy and United Kingdom, I have already mentioned, France, Germany, Poland and Spain. The technology mix are already highlighted this. And yet it is a small team, but the combination of competencies, I think we've been able to find on the market and through our networks is quite compelling. There are 6 senior people now on the management team of Galileo Green Energy, and you see them for the Snapshot and a nice photograph on the following page. We did these photos in our offices in Milano, by the way. And yes, the team just to give you an idea, there are over 120 years of relevant energy and investment experience united. These 6 people together have developed and put into operation roughly 10 gigawatts of renewable power plants in the world in over 20 countries. And we are just some light on a couple of my colleagues, Nikolaus Mainka, he was CFO of the company of Enerparc from Germany, but operating in the U.S. for many years. Paolo Grossi, he was Managing Director of Innogy, and therefore, RWE in Italy, Eduardo Gonzalez Sola, he is evidently Spanish. He was in charge of Global Commercial Origination for Acciona. Luigi Canelli, he comes from Enel. He was global Head of Distributed Power Solutions for Enel. And Filippo Chiesa, he was leading M&A at a variety of very remarkable players in the renewable space. So I think there's some great talent and track record coming together with very complementary competencies and with a deep and long-standing network and this is what is, of course, helping us into the market. And you can see on the following page, before joint development agreements that we have been able to put in place over the last year to start with 1 in Ireland, called EMP. Our share is 50%. Our partners are a local developer and investors. The global wind turbine manufacturer. We've then put in place also GGE Nordics, our share is 80%. Again, we teamed up with a local developer and are concentrating on sites in Scotland and in mid-Sweden. And the last 2 are TEN Project and Star Energie. TEN Project is a wind pipeline in the south of Italy, with a very renowned -- very local but very renowned wind develop and Star Energy is about a 100-megawatt solar PV pipeline, again, with an entrepreneur, having done -- having develop our plants, renewable power plants already. One specific example I would like to share with you, and this is now depicted on the following pages about GGE Nordics. So here, you see there's a 1,000 megawatt wind pipeline that we are working on in these 2 markets. We foresee to have at least 5 onshore wind projects in each market. I should mention that there are very good wind conditions in Scotland and in Sweden. I think that we will see Sweden clearly as the cost leader in terms of wind power generation across Europe, presumably, together with Spain. However, the size of projects you can build in Sweden is outstanding across the whole of Europe. We're about to staff the teams there. We already hired 3 people. We will be adding an additional 6 to 8 people until the end of the year. And the total development cycle will require a spend of roughly EUR 60 million. And if you then say there's a 50% OE probability of success on the projects that we address. And of course, we develop them from early-stage onwards, then the cash-on-cash multiple that we are looking to realize with a joint venture of this kind is in the order of magnitude 4x. You see this on this very schematic graph that you see bottom right, how the value of a project is increasing over time. And of course, if you enter and you're capable of entering that project origination and then early stage and develop the project until late-stage final authorization. Finally, you build it, you have agnostic solution. You even operate it, then, of course, you're reaching the highest level of capital appreciation. And this is exactly the business model of Galileo Green Energy. So run this cycle and run it for many projects, different technologies in different countries at scale. Doing many of these joint development agreements and joint ventures, will, of course, lead to a substantial growth that is now shown to you on the following page, we foresee to ramp up our capacity of identifying and bringing it to final investment decision of 300 to 500 megawatts per year. This translates into an investment potential of roughly EUR 300 million to EUR 500 million per year. That is not all up for own investment. We can very flexibly deal with these opportunities. There's a deep market, an undersupplied market, and over -- a capital oversupplied market and a project undersupply market. So there will be very attractive opportunities also to sell down some of them to the market. We will achieve this building on a pipeline of about 10 gigawatts of quality projects that we are targeting for the year 2025. And the, yes, approximate repetition of technologies will be half of that will presumably be solar, another 3 gigawatts will be onshore. There will be a couple of offshore projects as well, and last but not least, we will also address in specific markets. And I think, also combined with offtake solutions for client's storage investments as well. I think we will be going for a country mix of over 10 countries, effectively, quickly, and achieve all of that with a team that is concentrated in terms of key competencies at Galileo with 50 people and then levered by 7 partners and 4 developers where I think we will finally be working with over 150 additional people. Equally important are the qualitative attributes, and this is what you can see here on the last page of my presentation. We are energy guys. We have done development. We have invested, and this is where we are coming for -- from. We love to create projects and implement green energy solutions. I mean, we are driven by that. We are convinced of that. We have a passion for this business. And I can say this honestly, for every single member of my team. How do we do it? As I said before, we do it not only on with our own competencies, but we are leveraging the competencies of our key partners. And there are 3 segments of partners, the development partners that is evident, but also the offtake partners, I speak of them as partners because we will see them linked to our projects and perhaps into portfolios of projects over a long period of time. And finally, we've also seen local communities hosting the plants as our partners. So integrating them and paying attention to their needs, I think, is equally important in order to raise public acceptance to the highest level and make the plants operating over a very long period of time. Last but not least, I think we are trying, I think, very credibly to build a number of principles among the team. Of course, we are responsible people taking care of resources and of one another in a good way. We work transparently. We absolutely want to be swift because this is a key differentiation criteria on the market. And we want to take the full benefit of casual diversity, which is a key element when you work across 30 countries and yet stand up as one united team. Thank you very much for your attention, and I think it's now time for a couple of questions. Thank you, again.

Thanks very much, Ingmar. And thanks for joining us at what's close to midnight your time. I've had a good level of Q&A, which I think reflects the interest that people have in this platform. To kick it off, could you give us a little bit more context just around the political environment and climate around renewables in Europe?

Of course, the political backing of renewables has increased over the years. And I would say it has never been as high as it is today. And that is effectively an easy statement because of 3 reasons. First of all, we have now brought, in particular, the Europeans with massive incentives that we deployed over last, in particular, 15 years. We have now helped the technologies through the development cycle to become competitive. And of course, now it is somewhat evident that we should be -- start to harvest also what we've invested over the last 15 years. So there is an economic consideration to start with. Secondly, we are, of course, convinced that the threat of climate change is real. There is even in the -- if you go -- if you ask for -- ask this question to, yes, the people industry, normally, you find 80% of the people backing the development. So there is a substantial support for this type of policy also among the electorate in many, many countries. And thirdly, I think we have now also found a combination of actors. And I mean, by that, the developers, the people building the plants, the equipment manufacturers, of course, the financiers, right, the banking sector. We've also very much activated the long term holding, right, opportunity for long-term oriented capital also in Europe, of course. And I think, yes, this combination of stakeholders is equally supporting the opportunity of we are doing more in that space. Now it is true, but there is also a, say, threat. Threat is that the translation from policy into regulation does not come at the speed that we are requiring in order to reach the 2030 targets. But here, I would say that it is a -- yes, the solution will not be the projects of the larger size. So this is what still certain people think that, well, simply increase the economies of -- or simply increase the size therefore, benefit from economies of scale, and then everything is doable. I don't think that this is the right solution for a continent that is made up of so many countries, of so many borders where we would need new transmission lines in order to evacuate all of the power. I'm a firm believer of, yes, the medium and also small, small-to-medium-sized utility-scale power plants that we can build across the full spectrum of geographies. And this type of plant, I think, will also be -- can be easy -- easier in the authorization process. And therefore, we'll make the bulk of the new additions going forward. So if that is a fair answer to your question. There are presumably others.

Yes. One of the questions that we have come up quite often and has come up again in relation to this platform. It'd be good to have your views on what the impact of investment or increased investment in hydrogen might have on Galileo?

Yes. So I'm -- yes, in this energy business now for many years. And I've seen quite a few technologies coming up and going away as well. Now hydrogen is really on top of the agenda. And this is fascinating because it is still a not mature technology. It is not a competitive technology. However, many people are thinking about it. How does it -- what is the place for hydrogen? If we want to fully decarbonize the energy mix of our countries, we need an energy vector. So we need an energy that will help us to do sector coupling, and by that, we mean cover also the energy demands from, in particular, transportation and heating. And we know of the seasonality of renewables. So the energy vector could do exactly that, bring the energy from the peak hours of production of be it solar, be it wind to valleys of production just by storing it in a certain way. And equally by transforming renewable power into another energy vector, we might unlock also the green energy potential in transportation and in heating. So there is ample space for an energy vector. The technology that today is #1 set in order to become our energy vector is effectively hydrogen. So the place is absolutely there, and the technology that is currently, say, most discussed, most researched and to a certain extent on the way to be analyzed at what conditions it could enter the market is effectively hydrogen. So it is important to us. We won't see an impact early on. But during this decade, it will certainly come. We have already received several ideas from large companies wanting to team up with developers in order to think about the kind of projects that would be needed renewable projects, the sizes, the right sites, and therefore, the right countries in order to think of renewable generation at the next level of scale. So I'm seeing it. I think there is an opportunity. It will not be too early, but over this decade, it's certainly something that we will be addressing. And most probably, together with partners, also in order to share the risk that is then related to the development of such very large sites.

Thanks, Ingmar. A couple of quick specific questions just to round out the last couple of minutes. Are you able just to give us a little bit more detail about when you talk about the cash-on-cash multiple and how you see that in terms of your development projects?

Yes. The...

Sorry, I'll just clarify and just around how you kind of calculate that cash-on-cash multiple at a high level?

Yes. Well, it is -- let's assume we bring a project to full authorization or even better to commercial start of operations. Then we find an appreciation of the project by capital that is long-term oriented and therefore, thanks to the predictability of the cash flows of the project, particularly efficient. And when we then calculate the development premium that we can realize through the proceeds of the sale of such a project, and we simply divide it by the capital that we have laid out in order to build the project, by the way, including attrition rate. Because you can calculate the cash-on-cash for a specific project. You do it properly, if you finally do it with the consideration of the pipeline, therefore, covering also attrition rate that you might have. Then you come up with multiples that are in the range of 3, 4, 5, sometimes even higher. There are markets today where the multiples are even at 8x or more, simply because there are not many projects coming to market. And therefore, the appreciation of these projects is, particularly pronounced. Now this is volatile. It is dynamic in each market. It has to do with demand and supply of quality projects. It also has to do with the long-term power price scenarios that the people make reference to. But my confident view is that there is substantial value creation possible for all of the 4 technologies I mentioned and for many markets that we are targeting. So I'm confident that we will be playing this development capital value accretion opportunity very, very successfully. Of course, it is our objective to enter early on. So greenfield development is at the heart of our strategy. And you see it, right? The long-term oriented capital is effectively coming in from the investment into operating assets. This is now a, I would say, consolidated market. And therefore, this capital is now moving on to the project at COD, sometimes projects that are just authorized. So this capital is taking some more risk, and therefore, the appreciation of these development levels is increasing on the market. We are well advised to concentrate on early to mid-stage projects contribute -- competencies increase or improve the parameters of the project, in particular authorize them, find a suitable and viable long-term offtake solution, build it, finance it, and then bring it to the market. This is how value accretion is realized going forward.

Thanks very much. We might leave it there, but thank you for the great insight into what is obviously an exciting opportunity, obviously, in early stages, but we look forward to hearing updates as we move through the next 12 months.

So staying with the renewables team, I'd like to -- it's my pleasure to welcome back Paul Gaynor, who's no stranger to the Investor Days. The unfortunate thing, we don't have him or as an executive down here in New Zealand. But -- so this is a business that was started in 2016, a partnership between Paul's team Infratil and New Zealand Super. And there's obviously a lot happened in the last 12 months. So we welcome Paul for the update.

Great. Thank you, Mark, and good morning, everybody. I'm calling in from Boston, Mass. So happy to be with you, not as late as Ingmar, but we're ready to get going. So why don't I flip to Slide 3, please. One more. Here we go. Okay. So 4 key themes for this year's update. Number one, notwithstanding a global pandemic, we actually had a really good 2020. I'll go into details of that. Our 2021 and '22 growth is very clearly identified. So in terms of a robust set of near-term opportunities, we can lay them out for you. In order to be prepared for that, we actually have a -- have upsized our capital by about $100 million and I'll cover that. And the last point that I want to make is that with the Biden administration now firmly in place, climate change is firmly near the top of his agenda, if not at the top. We expect even more growth in the market. And I would say that not so much maybe for '21 and '22, but that's more long-term oriented. So let's go to the next slide. What I want to do before we go into the 4 key messages is just give you a couple of background slides on Longroad. For those of you who've never seen the company before or just want to get an update, remember, the business has 3 segments: OpCo, DevCo, ServiceCo. You can see all of the different numbers in each. I'm going to go into them a little bit different. A little bit at a time, all of the different numbers. But OpCo is -- right now, it is 1.6 gigawatts, 13 projects. We actually announced an acquisition this morning, U.S. time. I'll talk about it a little bit later on in the presentation. So that brings our total operating fleet up to 1.6 gigawatts. This part of the business provides a lot of ballast for the more -- the riskier side of the business, meaning in the development business. This is a strategic -- we did this with strategic intent. And just to give you a sense of what kind of ballast that provides, in this year, we're expecting to generate about $15 million of distributions just from this portfolio. Devco, you can see, we kind of wrap development and acquisitions in one. We've a total of 2.9 gigawatts. We sold 1.3 gigawatts, that means the 1.6 gigawatts of Opco. We do have a deep pipeline. I'll talk more about that, about 33 people. And then Serviceco is a smaller business for sure, from a profitability point of view, but an incredibly important one from the strategic point of view. We do have a fair number of people there. We really are focusing on operating our own assets as well as the assets of some key institutional investors. So it's a very focused strategy, and it's important to make the rest of the business work. So why don't I flip to Page 5? Just one more background slide. Just to give you some numbers, upper left charts, 2 gigawatts developed since inception. Mark said, we've been in business for 4.5 years with Infratil and New Zealand Super. We've acquired almost 1 gigawatt. We've sold 1.3, that leaves 1.6. You can see that we have done -- we kind of -- if we -- if you remember from a couple of years ago that pie chart on the bottom left looked more equal between wind and solar. In the last couple of years, we've done predominantly solar and that is bringing -- that pie chart's looking much differently. And then just some of the key numbers here. In terms of employees, 126. Safety is incredibly important to us. 2020 was a great year on that front, in that we had 0 recordable incidents. So great -- kudos to our team and also with -- our Board looks at it pretty rigorously. Raising capital from third parties, whether that's debt capital, whether that's tax equity or when we're selling the project is incredibly important. Since inception, we've raised $6.4 billion, and we've raised $1.8 billion in the face of a global pandemic. That, to me, is a great accomplishment. And then the last couple of bullet points there, just our financial returns of Infratil, actually, the 60% is for all the investors as is the $173 million of distributions inception to date. All right. So those are the background slides. Please go to the next slide. So let me just start off with 2020. So this is the first key message that -- on balance, 2020 has been a pretty strong year for Longroad. So 2 points to make on this slide. The first one is, we -- in 2019, we made a strategic decision to -- at that point, our Opco was about 1 gigawatt. We've made a strategic decision to double it. And the point of this first -- the top half of the slide is that we've made a pretty good -- some pretty good progress on that front. So 1 point -- roughly 1.4 gigawatts. That doesn't include the deal we closed this morning. That's why it's 200 megawatts lower. So that, to us -- we view -- again, in terms of the ballast point, providing some distributable cash flow to the business in an otherwise maybe a low growth year in the Devco is very helpful. We also are finding that there's a lot of option value in -- within our operating fleet, new technology, repowering, refinancing, et cetera. So that -- we really love this part of our business. We're on our way to doubling it to 2 gigawatts, and we hope to do that within a few years or so. The second point is on the bottom half in terms of like how are we trying to grow it in terms of capital allocation. And what I thought would be best is to use a real-life example. And you can see a deal that we did in 2020. We did it with AIP, which is a Danish fund manager, 50-50 joint venture with Longroad, where they invested in 2 projects, Little Bear solar, which is now operational in California and Prospero 1, which is a West Texas solar asset. So the way it worked from the capital efficiency point of view is we -- obviously, we did all of the development. We raised all the capital. And then at closing of the deals, we effectively -- AIP made an investment, and that effectively got all of our capital out of those investments. We made a profit, not a huge profit, but we made a profit upfront. And importantly, we retain a 50% interest. We continue to operate those projects, so there's some revenue in there. And that type of structure really works. It's really efficient with our capital base. You get to put dollars out the door, turn them around and then still have effectively option value on these 2 great projects. We did a structure like this in 2019 with AIP, you might remember, called El Campo, it's a wind project. And the beauty of this deal is that we really just kind of copied and pasted the technology from that. It's almost an identical structure. Some of the details are different because the projects are different, but in terms of how the deal was negotiated with AIP and then importantly, how we're running the projects with AIP after closing has been seamless. So it's been great. So obviously, that's something that we would like to do more of. Next slide. Devco in 2020. Again, pretty solid year in the face of a global pandemic. This was our biggest year ever in terms of delivering new megawatts. You can see those 3 projects, Little Bear, Muscle Shoals and Prospero 2. Great cross-section of offtakers and locations. We store tax equity from Wells Fargo and U.S. Bank. And all in all, really happy with what we did in 2020 on the development front. One of the things when you think about how COVID could have impacted us, the thing that we were all worried mostly about was getting these construction sites actually shut down. The -- our team and the industry, in general, did a great job of putting in best practices on COVID management, and we had very few -- and I -- what I would call them kind of scattered incidents of COVID. They were dealt with quickly with our team and with the contractors team, and in the end, ended up having virtually no impact from COVID on our construction portfolio. So that's fantastic. The other thing I want to mention on Devco is that we consciously made a decision to kind of re-weight our portfolio. This goes back to, I'll call it, first, second quarter of 2019. That chart you see on the upper right shows the composition of our portfolio by region. And the 2 things that we were trying to do is shrink our exposure in Texas because we thought Texas was a little bit overcooked at the moment. We've done that. As you can see, there's -- right now, we actually have no exposure in ERCOT, which is -- a development exposure in ERCOT, which is great. We also wanted to put a little bit more emphasis on our western -- the western part of the U.S., specifically, Arizona and California. And you can see those green bars there. Southwest, we cranked it up from -- 3.5x from 650 megawatts to over 2.3 gigawatts. And our California portfolio went from 0 to 750 megawatts. So great work, again, consciously -- a conscious decision, and we proved that you can do it, you can kind of play the game live and make portfolio adjustments as the market changes. We're really happy with what we did in 2020. And we'll continue to do that as we go. If we go to the next slide, please. Okay. Serviceco. Again, it's -- when we drew up this business plan 4.5 years ago, we never conceived it would be this big. But I just want to put that in context from a profitability point of view in terms of moving the needle on our overall strategy. It's strategically very important. It is -- from a financial point of view, it's relatively modest. But notwithstanding that, you can see we added a lot of megawatts under management in 2020. One important relationship that I want to just mention is we agreed to manage 5 wind farms on behalf of BlackRock. BlackRock is a big renewable energy investor, obviously, across the globe, particularly in the U.S. They put out a competitive bid for their asset management services, and we were successful in doing that. So that's -- all of these -- when you think about what we're trying to do, these are big name, institutional investors. We don't want to -- we want to focus on a handful. There's 5 names here. Maybe it grows by 1 or 2 and try to grow those relationships as opposed to having 20 different clients on the service side. Next slide, please. So that's 2020. And I think, again, overall, a great result. I think if someone asked me last year, hey, Paul, you're going to have a global pandemic. Tell me how much -- tell me what you're -- what Longroad is going to do in 2020? I would have never forecasted what we did. I would have obviously been a lot more bearish on it, mostly due to, I would have no idea what it was going to do to the capital markets. I would have no idea what it was going to do to our whole development process. And for sure, on the construction front, I was pretty -- I would have been pretty nervous. So the fact that we sit here today with having a great 2020 in our book says a lot about what I'd say the industry in general and our success and track record and keeping it going for Longroad in 2020. All right. So next point is really just the capital base. So this is the second key message. There are 3 points I want to make here. Number one, upper left, the structure is efficient. If you look at -- again, this is before the upsize, which I'm going to talk about in a second. But if you look at what we've done in terms of turning over this capital, you can see the cash piece of our business, we've turned it over 1.6x since inception. The LC facility, we've turned over 3.6x. So that means we can take $1, invest it in a project, monetize that project, take that same dollar invested in project #2. That -- from a competitive point of view, that is a huge advantage. And it says a lot about the structure of investment with Infratil and New Zealand Super. It's been -- to me, it's been one of the reasons we've been very successful. Upper right on the capital increase. You can see that we've increased the cash facility from $125 million to $175 million. We've increased the LC facility. We call it a revolver. We've added another $50 million. So that's another $100 million. We've -- also have a sidecar Opco investment vehicle that we've also made. We had $45 million invested at the end of 2020. Sorry, that's at the end of -- at the beginning of 2020. And at the beginning of 2021, we've increased that by about $15 million. So that's great. One other point I'll make not on the slide is that, myself and my 3 partners, Michael, Charles and Pete, we each own -- we own 20% as a group. Each of us owns 5%. So there's a significant amount of kind of skin in the game coming from us with this capital increase. The last point I want to make on this slide is the bottom, and this has to do with the flexible capital. When you think about kind of how -- the renewable energy sector is very -- it's very disjointed. There's opportunities all across the risk spectrum, greenfield development, buying projects the day before commercial operation. And the beauty of our business model and our capital is that we actually have the freedom to invest all along the spectrum and to make sure that we're getting paid appropriately depending upon where we are along this risk spectrum. So again, huge competitive advantage, and we just want to keep it going. All right. Next slide. Third key message is our identified growth for the next 2 years. So these are deals that we have identified. They're fairly advanced in our development process and pipeline. You can see in total, 1.8 gigawatts of developments. You can also probably notice that they're all solar. So this goes to the fact that the investment tax credit relative to where the current production tax credit is a lot more, I'll call it, economic. And therefore, our development efforts have been focused principally on solar opportunities across the U.S. Now with the Biden administration in place, that may change, you may get an extension of some kind or some other climate-enhancing revenue streams. And of course, we'll adjust, and we're already preparing to adjust for that, if that indeed happens. A couple of points to make on the slide. Number one, we've got revenue already in place for over 50% of that portfolio. I don't know if we're going to do every single one of these deals. I would love to, but I'm not sure we're going to be able to do all of them in 2 years, but that doesn't mean that can't happen in 2023 or after that. So that's point number one. Point number two is on development margins, if you remember our 2018 guidance, I think we had the solar at 100 to 400 and wind at 500 to 300. I just reduced the top end of that range down a little bit. We'll see -- I'm optimistic that we can continue to kind of hit or exceed these ranges, but I just want to give you a sense of kind of how it's been going over the last few years. And the other thing that you'll see here is that storage is coming into the fray in many of our deals. You can see in Hawaii, Arizona, California, Utah. You can't really have a discussion about solar without also talking about storage. So 2021 and 2022, the growth prospects look really, really good, and we're excited about it. Next slide, please. Okay. So this is the deal that we announced this morning, we actually closed on Friday. So this is -- we're calling it Sun Streams. It was actually developed by First Solar. First Solar is a panel manufacturer that we've done a significant amount of business with over the last 4 years. They were the original developer. And then they -- and there's 5 phases in all. We actually have bought -- first phase has already been sold and is operational. We bought the second phase, which is called Sun Streams 2. That's 200 megawatts. It's under construction. It's actually -- if you look at the photograph, it's the one that's kind of in the foreground, you can actually see the construction process underway. And then Sun Streams 4 and 5, which you can't really see in this picture, but trust me, they're right around the corner. And the reason we like this development, a couple of reasons. Number one, it's big. So from a competitive point of view, from an ability to attract power buyers, we like it. If you see in the foreground -- sorry, in the back of the picture, at the kind of the top, I put a little arrow there with the -- it's the Palo Verde nuclear plant. It's -- I think it's the largest nuclear plant operating in the U.S. It supplies a significant amount of power to Los Angeles and to California and supplies a lot to the desert southwest. So we're literally within a stone's throw of one of the biggest kind of energy nodes in -- on the west coast of the U.S. So great strategic position to have. We do not -- so Sun Streams 4 and 5 are development assets. We do not have revenue contracts for them, but we think that given its strategic -- the strategic location, access to either California or Arizona or potentially in other markets and the ability for us to put storage on any of these projects, we think is a great formula for success. So really happy to get it done. It's great to work with First Solar, and they did a great job in getting the projects to here. And now our job is to get them to where we can create some value. Okay. Next slide. Okay, the last point is really the fourth key message, which is there's a lot of growth and kind of beyond what we're even seeing in the next couple of years. And the first thing I want to talk about is the energy transition. A lot of people talk about the energy transition. I didn't really understand what it all meant, to be honest. But it's pretty interesting when you think about it. There's -- there have been 2 massive energy transitions already. And you can see the blue bars on the left, that's basically kind of the wood and biomass. That's how back -- in the 1800s, that's the wood and biomass era. And then you see -- kind of in the middle of the chart, you can see oil and gas -- sorry, coal coming up. And now you're seeing oil and gas make a big push in the kind of the '70s, '80s. And now what's coming -- what's not shown on this slide is the next one, right? It's the transition to renewables. So this is really the context that we're thinking about this in the long term. I just want to give you 2 kind of data points to get your head around some of the numbers that portray the potential growth. Next slide. Okay. So I'm not going to go through all these charts, but these are called Sankey charts. They talk about supply and demand in the energy sector. The chart on the upper left shows what the energy sector looks like. The sort of the left part of the chart is the supply, the right part of the chart is the demand and then on the upper right part of the slide, you're seeing what could it look like in 2050. This is obviously taking from a report, a third-party report that's called America's Zero-Carbon Action Plan. But you can see -- again, I just picked out some of the numbers. If you look at the chart on the bottom right, you're seeing solar and wind going -- growing 2300%. You're seeing natural gas and petroleum dropping 80-ish percent. You're seeing the whole electrification in general going up 28%. So there's going to be a lot more electricity as an energy source than there is today. And then hydrogen, and Ingnmar talked a little bit about hydrogen as kind of a transition or an energy sync an energy conversion. So that's 1 data point to take a look in terms of the number of -- when you think about going from 2300% change in solar and wind, it is staggering. And this is just in the U.S. All right. Next slide. To get a little bit more real on kind of what impact the Biden administration could have on us in terms of what that administration's goals are. You're seeing some numbers around what he calls the 2035 net-zero electricity target -- net-zero carbon electricity target. And again, this is the amount -- what you're seeing in the dotted line there is the amount of new capacity from today that would have to be installed in order to meet this 2035 net-zero carbon target. About 70 to 80 gigawatts a year of wind and solar, $100 billion of private capital per year. So in terms of keeping that in perspective, the best year ever, if you add the best ever solar year and the best ever wind year and those didn't happen in the same year, that sum is 35 gigawatts. So we need to do twice that every year for the next 15 years. So we're happy to be -- that's why we call Longroad long road. It's a long road. The fundamentals are positive, and we're really happy to be here. So I'll stop there and take some questions.

Thanks very much for joining us, Paul. As always, an incredibly insightful presentation from you and the team and a number of people expressed their disappointment that you couldn't join us. So hopefully, next year. Probably just following on from that last point, are you able to just provide a few extra comments on what the Biden administration might look for specifically in terms of renewables? Or what we could expect to see over the next couple of years?

Well, I think the answer, that is a little bit of -- I'd say it's an all of the above because it's not something that's going to be done with what I would call, incremental legislation. So it's going to have to be some combination of tax credits, some -- what everybody's calling, direct pay in order to kind of free up some of the tax equity market, federal procurement, federal lands, transmission, permitting, acceleration of that process. Giving FERC, which is the federal regulator, giving them a little bit more freedom and/or authority to kind of push development projects along from a queue position -- from a interconnection queue position. So it's staggering actually when you think about all of the things it has. And then there's clean energy -- there's a clean energy standard that's on the table. And obviously, the golden kind of -- the key to success would be some kind of a climate, priced on carbon and with some climate targets. So I'm not sure all of that's going to happen in the first couple of years. I think that there's a pretty aggressive -- and when you think once this COVID legislation has passed, I think the administration is going to move quickly to this infrastructure bill. And I think in there, that infrastructure bill will contain a lot of incentives and, I'll call it, motivations for trying to hit this goal. But we're going to be -- we're definitely going to need to change some of the rules.

Looking at Longroad specifically, are you able to talk through, I guess, there's a huge scale in the Longroad platform. What are some of the areas that you look around assessing the kind of buy, hold, sell decisions around your projects?

Yes, sure. I think we -- I'd say that we take a pretty thoughtful view as to whether or not we're going to -- it's not just an automatic process of develop a project and sell it. I think there's a view as what does the market think of the value. What do we think of the value? How do those 2 things compare? And then let's go ahead and make a plan. I think the AIP transaction was -- is a great example of -- they are obviously a sophisticated institutional investor. We like the valuation that they put on the project. But they said, we want you to own 50% of it. We want you to have skin in the game. That -- and so when we looked at that outcome, it was a great way to kind of optimize that whole decision-making process. And we'll continue to do that. We actually have -- at the moment, we have Prospero 2, which is one of the development projects that I talked about that we closed in 2020. That is -- we own 100% of that right now. It's in under construction. We are now looking at opportunities to either sell that, sell it all, sell a portion of it or keep it. I mean that's -- so it's a constant live set of calculations to make sure that we're seeing what are investors saying, what we think about it kind of both short term and long term, and how do we make -- how do we maximize the outcome for our investors?

As a follow-on to that point, are you able to make some comments on some of the trends you're seeing in the PPA market at the moment in the U.S.?

Yes. Well, I think the general comment is that it continues to be led by corporates. I mean, the corporate, I think I've shared this comment at previous Infratil Investor Days. I can't believe -- again, when we started Longroad, I would have never predicted the way that the corporates have come off the seats in terms of their buying appetite. It's been awesome. So -- and I think -- and in certain cases, that -- and the corporate buying universe is -- continues to grow every year, right? So you're seeing more new entrants into the PPA market. So that's helpful. In terms of pricing, it's -- a developer's perspective is that the prices are never high enough. But we are seeing in certain parts of the country that actual PPA prices are starting to creep up just a little bit. So before then, we were seeing a pretty steady decline in -- not massive, but every bid -- or every result of every bid was lower than the one the month before. We're kind of seeing a little bit -- we're seeing that slow down just a little bit, which, again, is great for us.

That probably provides a nice crossover to the next question. Are you able to provide a little bit more detail about who are the type of investors that are actually looking at buying the types of projects you're developing at the moment?

I would categorize them as mostly institutional investors, infrastructure investors, investors that are managing family money or pension fund money that want to, I would call, just obviously, get a little bit of -- get derisked or get a certain rate of return on an asset that they can look at. And so these types of investors don't want to take development risk. Some of them might not even want to take construction risk, but they certainly like the fact that they've got a 35- to 40-year asset with a 20-year contract with an investment-grade corporate or utility. Those are the types of investors that we're seeing quite frequently in the market.

Great. And one more question, I guess, just to round us out. Any more visibility on what you're seeing around construction costs, the potential impact that they might flow through into the project IRRs as well?

Construction costs have been -- I'd say, have been pretty consistent in terms of -- I'd say, neither rising nor falling in the markets that we're looking at. There are always exceptions to that. There's one particular region in the U.S. that is relatively kind of uncharted waters where you're seeing a pretty wide band of construction costs. So those parts of -- that part of the development process is relatively risky in terms of getting -- you want to make sure that you can actually build the project for what you think it's going to cost and what your own team thinks is going to cost, and then you take it out to the market and say, what does the market say it's going to cost? So I'd say most of the U.S. and most of the things that we're working on have a very predictable CapEx range. There are, of course, a couple of exceptions that we're just trying to derisk at the moment.

Right. I know we're right on time to finish with them. Can I thank you, Paul, for joining us and giving us another great update. Hopefully, next year, we'll get to see you. New Zealand golf courses miss you.

I hope so. I miss New Zealand.

What I'm going to do is just ask Jason just for a quick wrap before we move to lunch when he finishes. We're going to take a break until 1:30 New Zealand Time, 11:30 Australian. So thanks, Jason.

Yes. I mean, thank you, Paul, and thank you Ingmar before you. I think it's hard not to feel that experience and knowledge and capability of these people oozing out of the screen, right. And I think Ingmar did a really nice job of summarizing the translation of our idea into what is now a very real asset. And Paul, congratulations on a phenomenal year and a near-term outlook, that's really solid. I think you can -- it's hard not to be bowled over right by the investment task that's ahead of us in the sector. And you can see why we are super confident that the investment opportunities here in other areas as well will far exceed the capital that we have to bring to be in. I think there was a question specifically on Galileo pace of investment. But I think Ingmar -- I think we still have you, so I don't know if you're able to quickly comment on that. I think they're sort of looking about what would we project over the next year.

Yes. So in terms of capital, say, investment or deployment, I would say there's -- there are 2 streams. One is the ordinary, say, buildup of the pipeline. And our objective of pipeline over this year is certainly going up to, say, 2 to 3 gigawatts. I think that would be the reasonable pipeline at the end of the year. The costs that you need to undertake in order to build a pipeline from scratch is, to be measured in, say, for that size of pipeline around $25 million, perhaps a bit more. It depends, of course, on the entry point that we choose. And I would say that is ordinary course of business. However, there are also mid-stage opportunities. So -- we are looking at in a very selective way. However, we are looking at a couple of mid-stage opportunities where pipelines are coming to a market, and they could provide us the opportunity to access the market with one substantial pipeline, sometimes also with a couple of very seasoned developers. And yes, then the envelope could also be larger. So difficult to say what factor is. But I think in some of the large markets, the 6 that I mentioned before, there are opportunities we are looking at, and it may well be that something will pop up even before the end of this year. So Poland might be one market, but also Germany and France is a very attractive market. Spain with new regulations is about to create new opportunities. So hard to say that there's one market missing. So we are looking at that as well.

Yes. I totally agree with that. And finding some of those inorganic opportunities is exactly what we're about, right? So good luck with that search. I might leave it there.

Thank you.

Thank you. Thank you, Ingmar. Thank you, Paul.

Thank you.

And welcome back, everyone, to the afternoon session of the Infratil Investor Day. My pleasure in welcoming Paul Newfield, who's no stranger to these days or to a lot of this audience. Paul is going to introduce the health care section of the afternoon and the Qscan profile. Paul's led a lot of the work at Morrison & Co. with the team around looking at this industry for quite a while and then looking at the specific opportunities. So welcome, Paul.