Q2 2025 Brookfield Infrastructure Partners LP Earnings Call
Good day and thank you for standing by. Welcome to the Brookfield infrastructure Partners. Second quarter, 2025 results conference call and webcast.
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David Krant: Thank you, Liz, and good morning, everyone. Welcome to Brookfield Infrastructure Partners' second quarter 2025 earnings conference call. As introduced, my name is David Krant, and I am the Chief Financial Officer of Brookfield Infrastructure. I'm joined today by our Chief Executive Officer, Sam Pollock, and Brian Baker, an operating partner responsible for managing our Canadian midstream franchises. Also joining us today are Ben Vaughn, our Chief Operating Officer, and Dave Joynt, our managing partner in our transportation business. I'll begin the call today with a discussion of our second quarter financial and operating results, followed by an update on our capital recycling initiatives. I'll then hand the call over to Brian, who will discuss the positive outlook for Canada's energy sector. And finally, Sam will provide an update on our recent new investments and conclude with an outlook for the business.
I'd now like to hand the conference over to David krant Chief Financial Officer. Please go ahead.
Thank you, Liz and good morning everyone.
Welcome to Brookfield, infrastructure Partners, second quarter 2025 earnings conference call. As introduced my name is David krant and I'm the Chief Financial Officer of Brookfield. Infrastructure
I'm joined today by our chief executive officer. Sam Pollock and Brian Baker an operating partner responsible for our managing, our Canadian Midstream franchises
Also joining us today are Ben Vaughn, our chief operating officer and Dave joint our managing partner and our transportation business.
I'll begin the call today with a discussion of our second-quarter financial and operating results, followed by an update on our Capitol recycling initiatives.
I'll then hand the call over to Brian, who will discuss the positive outlook for Canada's energy sector.
David Krant: At this time, I'd like to remind you that in our remarks today, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on known risk factors, I would encourage you to review our latest annual report on Form 20F, which is available on our website. Brookfield Infrastructure had another strong quarter, delivering stable and increasing financial results, as well as making significant progress on its capital deployment and recycling objectives. First, on results, we generated funds from operations, or FFO, of $638 million or 81 cents per unit in the second quarter, up 5% compared to the previous year. This result improves to a 9% increase when excluding the effects of foreign exchange, highlighting the strength and stability of our underlying base business performance.
Finally, Sam will provide an update on our recent new Investments and conclude with an outlook for the business.
At this time, I'd like to remind you that in our remarks today. We may make forward-looking statements
These statements are subject to known and unknown risks and future results May differ materially.
For further information on known risk factors, I would encourage you to review our latest annual report on form 20x, which is available on our website.
Brookfield infrastructure had a another strong quarter, delivering stable and increasing Financial results, as well as making significant progress on its capital deployment and recycling objectives.
First unresolved, we generated funds from operations, or ffo of 638 million or 81 cents per unit. In the second quarter up 5%, compared to the previous year.
David Krant: The increase was primarily driven by strong organic growth above our target range, as well as contributions from Tuck In acquisitions completed in the prior year. Taking a closer look at results by segment, our utilities generated FFO of $187 million, slightly ahead of the prior year. Results benefited from inflation indexation, along with contributions from approximately $450 million of capital added to the rate base. The strong underlying performance was partially offset by the sale of our Mexican-regulated natural gas transmission business that closed in the first quarter of this year. Moving to our transport segment, FFO was $304 million. After adjusting for capital recycling initiatives and foreign exchange, results were slightly ahead of the prior year as well.
This result improves to a 9% increase, when excluding the effects of Foreign Exchange, highlighting the strength and stability of our underlying base business performance.
The increase was primarily driven by strong organic growth above our target range, as well as contributions from tuck in Acquisitions completed in the prior year.
Taking a closer look at results by segment, our utilities generated ffo of 187 million slightly ahead of the prior year.
Results benefited from inflation indexation along with contributions from approximately 450 million dollars of capital added to the rate base.
The strong underlying performance was partially offset by the sale of our Mexican regulated natural gas transmission business, they closed in the first quarter of this year.
Moving to our transport segment, ffo is 304 million.
David Krant: The solid underlying performance was supported by high asset utilization at our global intermodal logistics operations, continued volume strength at our rail and port businesses, and increases in both traffic levels and rates on our toll roads. Our midstream segment generated FFO of $157 million, representing a 10% increase over the same period last year, driven by strong organic growth across our franchises. In particular, our Canadian diversified midstream operation performed well due to higher customer activity levels and strong asset utilization. In a moment, Brian will speak to the strong momentum we are continuing to experience across the Canadian midstream operations. And lastly, FFO from our data segment was $113 million, representing a step-change increase of 45% compared to the prior year.
After adjusting for Capital recycling initiatives, in foreign exchange results were slightly ahead of the prior year as well.
The solid underlying performance was supported by high asset utilization. At our Global Intermodal, Logistics operations continued. Volume strength, at our Rail and Port, businesses and increases in both traffic levels and rates on our toll roads.
our Midstream segment generated ffo of 157, million representing a 10% increase over the same period last year, driven by strong organic growth across our franchises
In particular, our Canadian Diversified mainstream operation performed. Well, due to higher customer activity levels and strong asset utilization,
In a moment, Brian will speak to the strong momentum. We are continuing to experience across the Canadian Midstream operations.
David Krant: This growth was driven by the contribution from the Tuck In acquisition of a tower portfolio in India completed last year, along with the commissioning of newly built capacity and initiating new billings across our data center platforms. In addition to strong, our solid operating results, we continue to demonstrate strong execution of our capital recycling strategy to self-fund our growth. We have secured $2.4 billion of sale proceeds to date this year, already achieving an annual record for BIC, with several incremental sales processes in the queue for the second half of the year. Included in this total are four recently secured asset sales. The first is the sale of a 23% interest in our Australian export terminal, the world's largest metallurgical coal export facility. We acquired our interest in the business in 2010 and partially exited our investment in 2020 through a public listing in Australia.
And lastly ffo from our data segment was 113 million, representing a step change increase of 45% compared to the prior year.
From a tuck in acquisition of a tower portfolio in India completed last year, along with the commissioning of newly built capacity and initiating New Billings across our data center platforms.
In addition to our solid operating results, we continue to demonstrate strong execution of our capital recycling strategy to self-fund our growth.
We have secured 2.4 billion dollars of sales proceeds to date this year.
Already achieving an annual record for bit with several incremental sales, processes in the queue for the second half of the year.
Included in this total are 4 recently, secured asset sales.
The first is the sale of a 23% interest in our Australian export terminal, the world's largest metallurgical, coal export facility.
David Krant: Since then, we have achieved several key value creation milestones, including extending contract durations and simplifying our tariff schedule. This sale was completed in June and resulted in approximately $280 million in proceeds. We have realized a cumulative return of 22% and a multiple of capital of four times, while still retaining a 26% interest in the business. The second is the secure sell down of an incremental 60% stake in a 244-megawatt portfolio of operating sites at our European hyperscale data center platform. This results in an additional $200 million in proceeds and finalizes our planned sell down of 90% for total proceeds of approximately $300 million net to BIC. We expect to fully complete the transaction in the third quarter of this year.
We acquired our interest in the business in 2010 and partially exited our investment in 2020. Through a public listing in Australia.
Since then we have achieved several key value creation, Milestones including extending contract durations and simplifying. Our tariff schedule.
This sale was completed in June and resulted in approximately 280 million in proceeds.
We have realized that cumulative, return of 22% and a multiple of capital of 4 times while still retaining a 26% interest in the business.
The second is the secure cell down of an incremental 60% stake in a 244 megawatt portfolio of operating sites at our European hyperscale data center platform.
This results in an additional million dollars in proceeds and finalizes, our planned sell-down of 90%, for total proceeds of approximately dollars, net to bip.
David Krant: The third sale is a further 33% divestiture in a portfolio of fully contracted containers at our global intermodal logistics operations, replicating the prior sale under the same established framework. We expect incremental proceeds to be approximately $115 million, with closing anticipated in the third quarter of this year. We have now sold approximately two-thirds of this portfolio and generated over $230 million in net proceeds to BIC. Finally, we agreed to terms for the partial sale of our UK port operation, which will generate approximately $385 million of proceeds and deliver an IRR of 19% and a seven and a half times multiple of our capital. Since acquiring a 59% interest in 2009, we have successfully completed a comprehensive modernization of the port's operations, which included expanding the infrastructure to service large vessels and attracting new long-term contracts.
We expect to fully complete the transaction in the third quarter of this year.
The third sale is a further 333% dive in a portfolio of fully contracted containers at our Global Intermodal Logistics operations, replicating, the prior sale under the same established framework.
We expect incremental proceeds to be approximately 115 million dollars with closing anticipated in the third quarter of this year.
we've now sold approximately 2/3 of this portfolio and generated over 230 million in net proceeds to build
Finally, we agreed to terms for the partial sale of our UK Port operation, which will generate approximately 385 million of proceeds and deliver an irr of 19%. And a 7 and 1/2 times multiple of our capital.
David Krant: These value-creating initiatives resulted in EBITDA tripling during our ownership so far. The transaction is expected to close in the fourth quarter of this year, after which we will own a 25% interest in the business, which allows us to participate in the next stage of growth in a highly strategic infrastructure asset. That concludes my remarks for this morning, and I'll now turn the call over to Brian, who will highlight the attractive backdrop for Canada's energy sector. Thank you, David, and good morning, everyone. Canada's energy industry is benefiting from several trends that support growth and strengthen the outlook for the sector in the coming years. This positive backdrop, in turn, benefits BIC's three Canadian midstream businesses relating to new investment opportunities, higher levels of organic growth, and more optionality at exit. The Canadian government is focused on energy security and diversifying its trade relationships.
Since acquiring a 59% interest in 2009, we have successfully completed a comprehensive modernization of the ports operations, which included expanding the infrastructure to service large vessels and attracting new long-term contracts.
These value creating initiatives resulted in even a tripling during our ownership so far.
The transaction is expected to close in the fourth quarter of this year after, which we will own a 25% interest in the business which allows us to participate in the next stage of growth in a highly strategic infrastructure. Asset,
That concludes my remarks for this morning and I'll now turn the call over to Brian who will highlight the attractive. Backdrop for Canada's energy sector.
Thank you, David and good morning. Everyone Canada's energy industry is benefiting from several trends, that support growth, and strengthen the outlook for the sector in the coming years.
This positive backdrop in turn, benefits bips 3 Canadian, Midstream businesses relating to new investment opportunities, higher levels of organic growth and more optionality at exit.
David Krant: This alignment provides support to five key trends that collectively underpin our positive regional midstream sector outlook. The first is the strong demand profile for Canadian energy. Countries are increasingly seeking out diversification of energy supply, which is creating new demand for Canadian energy internationally. At the same time, investment in artificial intelligence is creating massive demand for electricity locally. For example, Alberta has approximately 12 gigawatts of requested power demand from data centers, up from 200 megawatts only a few years ago. This would represent a doubling of the province's current peak energy demand. Second is that there is improved end-market diversification. Several key Canadian infrastructure projects have recently been completed to enhance global market access. One of these projects, LNG Canada, is set to ramp up production over the next 12 months, with a potential second phase under consideration that could double its capacity.
The Canadian government is focused on energy security and diversifying its trade relationships.
This alignment provides support to 5. Key trends that collectively, underpin our positive Regional Midstream sector Outlook.
The first is a strong demand profile for Canadian energy.
Countries are increasingly seeking diversification of energy supply, which is creating new demand for Canadian energy internationally.
At the same time investment in artificial intelligence is creating massive demand for electricity locally.
For example, Alberta has approximately 12 gigawatts of requested power demand from data centers up from 200 megawatts, only a few years ago.
This would represent a doubling of the province's current Peak energy, demand.
Second, there is improved market diversification. Several key Canadian infrastructure projects have recently been completed to enhance global market access.
David Krant: Several other LNG projects are also on track to add over 5 million tons per annum of export capacity by the end of 2028. Third, Canada has a highly economic resource. Our assets are strategically positioned near some of the most abundant and economically attractive resource basins in North America, with decades of future production potential. The Montney, for example, has 80 to 90 years of remaining gas resources at a production rate that is almost 40% greater than what is being produced today. These reserves ensure Canada will be cost-competitive globally, offering domestic producers attractive returns that incentivize production growth. The fourth is social license. Public support for the responsible development of Canada's energy resources and associated infrastructure has improved considerably across the country. This presents a significant opportunity to further align the country's economic interests with its natural resource advantages.
1 of these projects. The LG Canada is set to ramp up production over the next 12 months with a potential second phase under consideration that could double its capacity.
Several other LNG projects are also on track to add over 5 million tons per adom of export capacity by the end of 2028,
Third, Canada has a highly economic resource.
Potential.
The Monty for example has 80 to 90 years of remaining gas resources at a production rate that is almost 40% greater than what is being produced today.
These reserves ensure Canada will be cost competitive globally. Offering domestic producers attractive returns, that incentivize production growth.
David Krant: It reinforces the case for continued investment in the midstream sector by established operators like us that have a strong operating track record, prioritizing safety and sustainability. And fifth, we are seeing improved investor interest. Strategics, financial investors, and international investors have all expressed interest publicly to invest more capital in the Canadian energy sector, given the critical nature of Canadian midstream assets, its world-class operating track record, and attractiveness of the resource basin. We expect to directly benefit from all of these trends across our Canadian midstream portfolio, with leading franchises across transportation, gathering and processing, and natural gas storage. Specifically, our natural gas gathering and processing business has experienced a 15% increase in utilization to approximately 85% over the past two years. We have simultaneously executed longer-term contracts that have improved contract duration by more than two years to reach 11 years on average.
The fourth is social license public support for the responsible development of Canada's energy resources and Associated. Infrastructure has improved considerably across the country. This presents a significant opportunity to further. Align the country's economic interests with its natural resource advantages.
It reinforces the case for continued investment in the Midstream sector by established operators, like us that have a strong operating track record the prioritizing safety and sustainability.
And fifth. We are seeing improved investor interest.
Strategic Financial investors and international investors. Have all expressed interest publicly to invest more capital in the Canadian. Energy sector given the critical nature of Canadian Ministry of assets. Its world-class operating track record and attractiveness of the resource basin.
We expected directly benefit from all of these Trends. Our Canadian Midstream portfolio with leading franchises across Transportation Gathering, and processing and natural gas storage.
Specifically, our natural gas Gathering and processing business has experienced a 15% increase in utilization to approximately 85% over the past 2 years.
David Krant: Our long-haul transportation pipelines are experiencing a resurgence of new commercial interest, with over $90 million of contracted EBITDA coming into service in the next six months, and a large pipeline of new connection opportunities that are all incremental to our underwriting at very attractive build multiples. In the last two years, our North American gas storage operation has benefited from contracted capacity and rates increasing to the highest levels we experienced during our ownership. We expect a lengthening of contract duration and higher rates to persist as storage demand continues to rise in support of new gas production, the build-out of Canadian LNG export capacity, and other sources of demand. These commercial benefits that can be realized with no incremental capital investment will further contribute to the business's high free cash flow conversion.
We have simultaneously executed, longer-term contracts, that have improved contract duration, by more than 2 years to reach 11 years on average.
Our Long Haul. Transportation pipelines are experiencing a Resurgence of new commercial interests with over 90 million Canadian dollars of contracted. Eva deck coming into service in the next 6 months, and a large pipeline of new connections opportunities that are all incremental to our underwriting at very attractive build multiples.
In the last 2 years. Our North American Gas storage operation has benefited from contracted capacity and rates increasing to the highest levels we experienced during our ownership.
We expect the lengthening of contract duration, and higher rates to persist as storage demand, continues to rise in support of new gas production. The buildout of Canadian LG export capacity and other sources of demand.
David Krant: These are just several examples of the positive impact that has been experienced so far within our business. We're equally enthusiastic about the strong growth outlook across the Canadian midstream franchise. At our two largest midstream platforms alone, we expect EBITDA growth of $650 to $750 million between 2024 and 2027, with further upside related to approximately $2 billion of identified organic growth projects that are being advanced and not currently in our backlog. While these benefits accrue to our in-place franchise, we are excited by the momentum in the Canadian midstream sector as we aim to continue investing to acquire new platforms, develop new infrastructure projects, and ultimately deploy our large-scale and flexible capital at strong risk-adjusted returns. That concludes my remarks for this morning, and I'll now pass the call over to Sam.
These commercial benefits that can be realized with no incremental. Capital investment will further contribute to the business's High free cash flow conversion.
These are just several examples of the positive impact that has been experienced so far within our business.
We're equally enthusiastic about the strong growth Outlook across the Canadian Midstream franchise.
At our 2 largest, Midstream platforms alone. We expect IBA growth of 650 to 750 million Canadian dollars between 2024 and 2027 with further upside related to approximately 2 billion, Canadian dollars of identified, organic growth projects that are being Advanced and not currently in our backlog.
While these benefits occur to our Inn Place franchise, we are excited by the momentum in the Canadian Midstream sector as we aim to continue investing into a new platforms, develop new infrastructure projects, and ultimately deploy our large scale and flexible Capital at strong risk adjusted returns.
Sam Pollock: Thank you, Brian, and good morning, everyone. As David mentioned in his opening remarks, we've deployed significant capital so far this year, securing three new investments, including transactions in our data, transport, and midstream segments. Combined, these acquisitions represent $1.3 billion of capital deployment for BIC. Most recently, we signed an agreement to purchase Hotwire, a leading provider of bulk fiber-to-the-home services that develops, builds, and operates regional fiber networks that serve residential communities in key growing markets in the United States. The company employs a differentiated strategy focused on securing bulk fiber agreements with homeowner associations, providing 100% of the residences in the communities with critical fiber services. These services are underpinned by a long-term taker pay and inflation lake contract with a 100% contractual renewal track record.
That concludes my remarks for the morning and I'll now pass a call over to Sam.
Thank you, Brian. And good morning everyone.
As David mentioned in his opening remarks, we've deployed significant Capital so far. This year, securing 3, new Investments including transactions in our data transport and Midstream segments.
Combined, these Acquisitions represent 1.3 billion dollars of capital deployment for bip.
Most recently, we signed an agreement to purchase. Hotwire a leading provider of both fiber to the Home Services that develops bills and operates, Regional fiber networks that serve residential communities in key growing markets in the United States.
The company employed a differentiated strategy focused on securing both fiber, agreements of homeowner associations.
Providing 100% of the residences in the communities, with critical fiber services.
Sam Pollock: The Hotwire platform has over 300,000 billion customers, a significant contracted backlog, and credible growth potential through an addressable market of over 12 million homeowner association units within its footprint. We expect this growth will be entirely self-funded. Closing is expected late in the third quarter, with an equity purchase cost of up to $500 million at our share. In May, we entered into an agreement to acquire a leading railcar leasing platform in partnership with GATX, a best-in-class railcar lessor. The portfolio is the second largest railcar leasing platform in North America, with a critical, highly diversified, and large-scale transportation network of over 125,000 railcars that are 98% utilized. The business is highly cash-generative, providing stable cash flows that are supported by a diversified and largely investment-grade customer base.
These services are underpinned by a long-term taker, pay and inflation link contract with a 100% contractual renewal track record.
The Hotwire platform has over 300,000 billion, customers.
A significant contracted backlog and credible growth potential through an addressable Market of over 12 million homeowners association units, within its footprint.
We expect this growth will be entirely self-funded.
Closing is expected late in the third quarter, with an equity Purchase cost of up to $500 million at our share.
The portfolio of the second largest rail car. Leasing platform in North America.
With a critical highly Diversified and large-scale transportation network of over 125,000 rail cars that are 98% utilized.
Sam Pollock: The transaction is anticipated to close in the first quarter of 2026, hopefully a bit sooner, with an equity contribution of about $300 million to our share. And then this week, and in fact today, we are closing the $9 billion acquisition of Colonial, the largest refined products pipeline system in the United States, with 2.5 million barrels per day of capacity spanning 5,500 miles from Texas to New York. This acquisition was completed at an attractive transaction multiple of around nine times EBITDA. We expect to benefit from a mid-season cash yield resulting in a seven-year payback period. Near-term efforts will be focused on business integration and initiating our value creation activities. BIC's equity consideration is approximately $500 million. Now, as we look ahead, we are experiencing strong momentum across our business.
The business is highly cast generative, providing stable cash flows that are supported by Diversified and largely investment grade customer base.
The transaction is anticipated to close in the first quarter of 2026. Hopefully a bit sooner.
With an equity contribution of about $300 million to our share.
And then this week and in fact, today we're closing the 9 billion dollar acquisition of colonial. The largest refined products pipeline system in the United States with 2.5 million barrels per day of capacity. Spanning 5,500 miles from Texas to New York.
This acquisition was completed and attractive transaction, multiple of around 9 times zebra.
We expect the benefit from a mid-teen cash Shield resulting, in a 7-year. Payback period.
Near-term efforts will be focused on business integration and initiating our value creation activities.
Bibs Equity consideration is approximately million dollars?
Sam Pollock: We believe the three Ds are stronger than ever, and while we've been investing in these transformative trends for many years now, the positive impact on our businesses continues to increase. We see these mega trends, particularly digitalization, as a key driver of the infrastructure supercycle, and we will capture our share of this generational investment opportunity. As we evaluate a large and diverse array of high-quality, value-oriented opportunities across our footprint, the US remains one of the most attractive investment geographies at the moment. However, we're also seeing opportunities emerging outside the US in many of the geographies where we have a significant presence, such as Europe, and in addition to that, several geographies in Southeast Asia where we've set up new regional offices.
Now, as we look ahead, we are experiencing strong momentum across our business.
We believe the 3DS are stronger than ever.
And while we've been investing in these transformative trends for many years now, the positive impact in our businesses continues to increase.
We see these Mega Trends particularly digitization as a key driver of the infrastructure, super cycle.
And we will capture our share of this generational investment opportunity.
As we evaluate a large and diverse array of high-quality value-oriented opportunities across our footprint.
The US remains 1 of the most attractive investment geographies at the moment.
However, we're also seeing opportunities emerging outside the US and met the geographies where we have a significant presence such as Europe.
And addition to that in several geographies in Southeast Asia. Um, where we set up new Regional Offices.
Sam Pollock: But while the vast majority of our capital recycling and deployment objectives for the year have already been secured, we're now focused on bringing forward sales and new investments into our pipeline so that we get a head start on next year's objectives. This concludes my remarks, and I'll now pass it back to Liz, our operator, to open the line for questions.
So, while the vast majority of our Capital Recycling and deployment objectives, for the year, have already been secured.
We're now focused on bringing forward sales and new investments into our pipeline so that we get a head start in next year's objectives.
Liz: As a reminder, if you'd like to ask a question at this time, please press star one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star one-one again. Please stand by while we compile the Q&A roster. Our first question comes from a line of Sherilyn Radborn with TD Cowan.
This concludes my remarks and on all passive back to Liz, our operator, to open the line for questions.
As a reminder, if you'd like to ask a question at this time, please press star 1, 1 on your telephone and wait for your name, to be announced to withdraw your question. Please. Press star 1 1 again.
Please stand by while we compile the Q&A roster.
Our first question comes from the line of cherylyn radborne with TD Cowen.
Sherilyn Radbourne: Thanks very much, and good morning. So clearly, 2025 has been a very active year for BIC, for both new investments and capital recycling. And yet the fundamentals are arguably not that different versus 2024. So I'm curious what you think has prompted the acceleration in deal velocity and whether it's something that's specific to BIC or something that is happening more broadly across infrastructure, perhaps simply due to a pent-up demand to transact.
Thanks very much, and good morning.
Sam Pollock: Hi, Sherilyn. Thanks for the question. Yeah, it's an interesting observation. You know, I agree maybe at the operating level of the various businesses, you know, trends have been consistent, you know, with the prior year. You know, I think it's funny, I think people have had at times more negativity than we've had. We've generally been positive about operating conditions, and I think we've seen that in our businesses over the last couple of years. I think last year there might have been a bit of a lull in transaction activity, as you noted. And I think all I can say is it's probably due to people no longer sitting on the sidelines and coming back into the markets to do things.
Uh, so clearly 2025 has been a very active year for for both new Investments and capital Recycling. And yet the fundamentals are arguably, not that different versus 2024. So, I'm curious what you think, is prompted, the acceleration in Deal velocity and whether it's something that's specific to bip or something. That is happening. More broadly across infrastructure. Perhaps simply do a pent up demand to transact.
Hi cherylyn. Um, thanks for the question. Uh, yeah. That's an interesting observation. Um,
yeah, I I agree maybe at the operating level of of the various businesses, um,
you know Trends have been consistent, you know, with the prior year um
you know, I think, um,
I I I it's funny. I think people have had at times more negativity than we've had. We've generally been positive about operating conditions and I think we've seen that in our businesses over the last couple years,
I think last year there might have been a bit of a low in transaction activity, as you noted.
and I I I think all I can say is um
Sam Pollock: Because the capital markets, you know, were strong last year, they remain strong this year, and there's always been a fair amount of capital on the sidelines, a lot of dry powder, so to speak. And I think it's just a matter of investor dynamics where people are now, you know, coming back and doing more. But all in all, look, we're very optimistic about the current market, and in particular, you know, we feel we're at the nexus of a lot of this activity around AI infrastructure, and it's affecting almost all our businesses in a big way.
Investor Dynamics, where people are now, you know, coming back and doing more. Um, but all in all, I look we're very optimistic about the current market. And in particular, um, you know, we feel we're at the Nexus of a lot of this activity around AI infrastructure and it's affecting almost all our businesses in a big way.
Sherilyn Radbourne: Yeah, that's helpful color. And given the very attractive backdrop that you highlighted for your Canadian midstream businesses, are there opportunities, do you think, to monetize partial stakes in some of those businesses the way that you've done very successfully in many of your other businesses?
Yeah, that's helpful color. Um,
And given the very attractive backdrop that you highlighted for your Canadian, Midstream businesses, are there opportunities? Do you think to monetize partial stakes in some of those businesses the way that you've done very successfully in many of your other businesses?
Sam Pollock: Yeah, I'll start there, and Brian or Ben or Dave can always jump in with additional comments. You know, look, I think there's always, you know, various, you know, businesses where, you know, we might look to, you know, partially sell down and return capital. That's just the nature of our business. And so there's always some of those opportunities we're looking out for. As a whole, though, I would say we're, you know, primarily focused on all the organic opportunities that Brian touched on. I don't think we've seen this level of pent-up demand and opportunities as we see today. And so we're quite enthusiastic about that. But, you know, to the extent that we can bring partners in to help us fund some of that growth, you know, that makes a lot of sense, and that's something we're going to do.
yeah, I I'll start there and and uh,
Brian or or Banner? Dave can always jump in with additional comments.
you know, look, I think, um,
Uh, there's always, you know, various, you know, businesses where, um, you know, we might look to, uh, you know, Parks you sell down, um, and return Capital. That's just the nature of of our business. Uh, and so there's always some of those, uh, opportunities we're looking out for, um, as a whole though, I would say we're, you know, primarily focused on all the organic opportunities that uh Brian touched on. Uh I don't think we've seen
This level of pent up demand and and opportunities as we see today and so we're quite enthusiastic about that.
Sam Pollock: And we're seeing a lot of interest in the Canadian midstream sector, both from retail investors, but also institutional investments internationally. So I think this is a good time for the Canadian midstream sector.
Um, but you know, uh, you know, to extent that we can bring Partners in to help us fund some of that growth. You know, that that makes a lot of sense and that's something we're going to do. And and we're seeing a lot of interest in uh the Canadian Midstream sector both from uh retail investors. But also institutional investors uh International. So I I think this is a good time for the Canadian and Midstream sector.
Sherilyn Radbourne: That's my two. Thank you.
Sam Pollock: Okay, thank you, Sherilyn. Have a nice summer.
Liz: Our next question comes from Devin Dot with BMO Capital Markets.
My 2. Thank you. Okay, thank you, Sharon. Have a nice summer.
Devin Dodge: Yeah, thanks. Good morning, everybody. I was going to start with a question on the Intel JV. Look, there's been some leadership changes. I'm sure you saw that at Intel. It's brought about maybe a potential shift in the strategy around its foundry business. I believe this includes reviewing the viability of producing one of the products that were intended to be made at that fab in Arizona. Just wondering if you could, you know, remind us of the protections that Brookfield has in place for this investment and when you expect it to start generating returns.
Our next question comes from Devon Dodge with BMO Capital markets.
Yeah, thanks. Uh, good morning, everybody. Um, I was going to start with a question on the Intel, uh, JV. Um,
Look, there's been some leadership changes. I'm sure you saw that at Intel. Uh, it's brought about maybe a potential shift in the strategy around its uh, Foundry business. Uh, I believe this includes reviewing the viability of producing 1 of the products that we're intended to be made at that Fab in Arizona, just wondering if you could
Sam Pollock: Hi, Devin. Yeah, as we've mentioned in the past and as Intel itself, you know, discloses, you know, our arrangement with them is largely financial and contractual in nature. And as a result, we don't take any commercial risks around the, you know, any capital cost overruns or commercialization of the various products. And so it's a relatively simple investment from that perspective. As we look at it, obviously, we take counterparty exposures, but we feel comfortable with the long-term sustainability of the sector as well as Intel's role as a national champion in the United States. So, you know, that's basically the dynamic. And, you know, as far as when we see contributions, we should see it as early as the end of next year. So, end of next year, early 2027, you know, you'll see it coming through our results.
you know, remind us of the protections that Brookfield has in place for this investment and when you expect it to start generating returns,
Yeah, as we as we've mentioned in the past and as, uh, Intel itself, you know, discloses, you know, our arrangement with them is, is largely financial and contractual nature. And as a result, we don't take any commercial risks around the, the, um, you know, any Capital cost overruns or uh, commercialization of of the various products.
and so it's a relatively simple investment from that perspective of um,
As we look at it, obviously, we take counterparty exposures, but we feel comfortable.
Uh with um the long-term sustainability of the sector as well as Intel's role as a national champion in the United States.
Sam Pollock: And otherwise, I think that's, I hope that answered your question.
So, you know, that that's basically the, the dynamic and, um, you know, as far as when we see, uh, contributions, uh, we should see it as early as the end of next year. So, and the next year early 2027, you know, you'll
You'll see it coming through our results. And, um,
Devin Dodge: Oh, that was great. Thank you. Second question, I was going to ask you about North American rails. Look, clearly, the Class 1 railroads are pursuing east-west mergers here. How should we think about the potential impact to Genesee and Loyal Main?
Otherwise, I think that's hope that answers your question.
Oh, that was great. Thank you. Um,
second question. I was going to ask you about uh North American rails. Uh, look at
Sam Pollock: Yeah, well, you know, we anticipated that question might come up, and we have our rail expert, Dave Joynt, who looks after our numerous investments in the rail sector here with us. And so I won't dare take a stab at it. He knows much more than I do. So, Dave, over to you.
clearly the class 1 railroads are pursuing East West mergers here. How should we think about the potential impact to Janice and Wyoming?
Yeah. Well, you know
Dave Joynt: Yeah, thanks. Hey, good morning, Devin. It's Dave here. Maybe I'll just play out what has transpired and then what the opportunity set is for us. So, of course, you know, you would have seen the announcement of the NS and UP merger, which would create the first transcontinental railroad in the United States. I think it's worth just noting that although the transaction's been announced, it's still subject to a lengthy regulatory review by the STB. And the outcome of that at this point in time is uncertain. What I would say is that the rules that the STB looks at for that merger demand that any merger must be deemed to be pro-competitive, you know, in the eyes of, you know, customers and shippers across the United States.
Question might come up and we have our rail experts uh Dave joint uh who looks after our uh numerous investments in the rail sector uh here with us. And so I won't dare take a stab at it. He he knows much more than than I do. So Dave.
Um over to you. Yeah. Thanks hey. Good morning, Devon. It's Dave here.
uh, maybe I'll just
What the opportunity set is for us. So, of course, you would have seen the announcement of the NS.
and up merger, which would create the first Transcontinental Railroad in the United States.
I think it's worth just noting that although the transactions been announced.
It's still subject to a lengthy regulatory review by the stb and the outcome of that. At this point in time is is uncertain.
What I would say is that the rules that the stb looks at for that merger, demand, that any merger must be deemed to be pro-competitive.
Dave Joynt: So, as G&W, you know, we operate as, you know, the largest shortline operator in the United States, you know, with over 100 railroads providing first mile and last mile access to customers. We effectively play the Switzerland role in the entire Class 1 network. So, we can direct traffic to, you know, one or multiple, you know, carriers, ensuring that customers have great service. And so, all I would say is that we are probably in a unique position to assist in, you know, continuing to keep a pro-competitive market, you know, in rail. And we'll look forward to, over the coming months, engaging with, you know, both the parties of the merger, but also with the Surface Transportation Board on how we can help.
In the eyes of, you know, customers and shippers across the United States.
So as g&w, you know, we operate as uh, you know, the largest Short Line operator in the United States, you know, with over a hundred railroads providing first Mile and Last Mile access to customers. We effectively play the Switzerland role in the entire class 1 Network. So we can direct traffic to, you know, 1 or multiple, you know, carriers ensuring that customers have great service. And so all I would say is that we are probably in a unique position to assist in, you know, continuing to keep a pro competitive market, you know, in Rail and we'll look forward to uh, over the coming months. Engaging with, you know, both the parties of the merger but also with the surface Transportation board on how we can help.
Devin Dodge: Okay, makes sense. Thanks for that. I'll throw it over.
Sam Pollock: Okay, thanks, Ed.
Okay, makes sense. Thanks for that. I'll turn it over.
Liz: Our next question comes from Maurice Choi with RBC Capital Markets.
Maurice Choy: Thanks, Ed. Good morning, everyone. Maybe let's start off with a comment you've made in the letter about how the US remains one of the most attractive investment geographies at the moment. Just curious if you've seen this leading position for the US expand versus other geographies over the last three to six months. And also, conversely, which seems to be the most attractive geography for asset sales would be interesting to know.
Markets.
Thank you and good morning everyone. Um, maybe let's start off with, uh, a comment you've made in the letter about how the US remains 1 of the most attractive investment geographies at the moment. Just curious if uh, you've seen this, uh, leading position for the US, uh, expand versus other geographies over the last, you know, 3 to 6 months. Um, and also conversely, which, um, seems to be the most attractive geography for, uh, asset sales would be would be interesting to know
Sam Pollock: Okay. So, Maurice, I apologize, I didn't quite get the first part of your question. I know it was related to the US as an attractive destination. Were you asking why we think that, or was there another element to it?
Okay. Um,
Maurice Choy: It's about why you think that, but also whether or not how the US has gone more attractive over time versus other countries. Why has that premium view expanded over time?
So Mor, I think it didn't quite get, the first part of your question. I know. It was related to uh, the us as a, a attractive destination. Uh, we we asking why we think that or was there another element to it.
Sam Pollock: Sure, sure, sure, sure, sure. And look, and it's relatively simple. It's not in the sense that, you know, we have a preference over the US versus Canada or the UK or Australia. We like them all. It really just happens to be that, you know, I mentioned earlier that a large part of our businesses are positively impacted by, you know, the AI infrastructure boom that's taking place, you know, that's driving the need for power, transmission, all those sorts of things, midstream investments. And the US is where the vast majority of the AI deployment is taking place today. And so that's just driving a number of great opportunities that we're able to take advantage of.
Um, it's, it's, it's about why you think that, but also whether or not, um, how the US, um, has gotten more attractive over time, um, versus other countries. So why has that, um, premium, um, view expanded over time? Sure, sure, sure sure. Sure, sure. And and, and, um, look, and it's relatively simple, it's not in the sense that, um,
Sam Pollock: We do see that other countries are trying to, you know, get their fair share of AI deployment and making sure they have homegrown talent as well and not just be beholden on the US for AI expertise. And so we expect that there will be significant capital deployed in other countries. In fact, we're focused very much on a number of AI factories around the world, particularly in Europe. And I think that's going to drive, you know, future capital deployment for us in those markets. So we do see more deployment taking place in other markets. You know, you asked a little bit about divestitures. You know, I think, you know, there's no, you know, we're monetizing assets in basically every market around the world today. And I think we've seen an appetite in virtually all markets for high-quality cash flow-generating infrastructure.
Um, yeah, we have a preference over the US versus Canada or the UK, or, or Australia, we like them all. Um, it really just happens to be that uh, you know, I mentioned earlier that a large part of our businesses are positively impacted by, you know, the AI infrastructure, boom. That's taking place, you know, that's driving the need for power transmission, all those sorts of things Midstream Investments. And the US is where uh, the vast majority of the AI, uh, deployments taking place today. And so that's just driving, uh, a number of great opportunities that we're able to take advantage of
um, we do see
that uh, other countries, um, are trying to, you know,
You know, get their fair share of AI deployment and and making sure they have homegrown uh Talent as well. And not just be beholden on the US for AI expertise. And so we expect that there will be significant.
Uh, Capital deployed in other countries. And in fact, we're focused very much on a number of
Uh, AI factories, uh, around the world, particularly in Europe.
And uh I think that's going to drive, you know, future Capital deployment for us in those markets. So
um, we do see more deployment taking place in other markets
you know, you asked a little bit about um, the vestures
Um, you know, I think, you know, there's no, you know, we're we're monetizing Assets in in basically, every market around the world today.
Sam Pollock: So there's no real, you know, market that I'd say that's in or out of favor. I think most people are just looking for high-quality assets.
and I think we've seen an appetite uh, in virtually all markets where high quality cash flow generating,
Maurice Choy: Understood. And maybe just finishing up on that same theme about the asset sales, just looking at the four deals that you've secured during or subsequent to the quarter, all four transactions were sell downs of partial stakes rather than a full exit that we've seen in some past transactions. So I wonder whether or not, is this just unique to each of the sale processes, or is there something to be said here about buyers wanting to see BIC's continuous participation?
Structure. So there's no real, you know, Market that I'd say, that's the in or out of favor. Um, I think, uh, um, most people are just looking for high quality assets,
Sam Pollock: Yeah, that's a good question. I guess, look, I think each situation has its own unique circumstances. I think in some cases, there are some buyers who do want to invest alongside an asset manager like ourselves, you know, to continue to drive value. And so that's definitely a consideration. I think also in some markets, you know, scale the investments, you know, dictates that it gets sold in smaller chunks than in one big pill swoop. And I think it just, I think it just happens that at this point in time, we just had a couple in a row that were like that. But I think you might see that we have a bunch of others coming down the road where we sold them 100%. So I don't think I should be too much into it at this stage.
Understood and maybe just finishing up on that same theme about the asset sales, just looking at the 4 deals that you've secured during our subsequent to the quarter. All 4 transactions were sell down. So, partial Stakes, rather than a full exit that we've seen in some past transactions. So, I wonder whether or not is this just unique to each of the co processes? Or is there something to be said here? About buyers wanting to see bit? Continuous participation?
Each situation has its own unique circumstances. I think, in some cases, there are some buyers who...
Who do you want to invest alongside?
You know, an asset manager like ourselves, you know, to continue to drive value. Uh, and so that's definitely a consideration. I think also, uh, in some markets
um,
Yep. Scaled Investments. You know dictates that it gets sold in um
that smaller chunks then and then in 1 big uh Bell swoop
um, and, and I think it
Just I think it's just happens that at this point in time. We just had a couple in a row that
were like that, but I think you might see that we have a bunch of others, coming down the road, where we we sold them 100%. So I don't think I should
Maurice Choy: Understood. Thank you.
too much into it at this at this stage.
Thank you.
Liz: As a reminder, if you'd like to ask a question at this time, please press star one-one on your touchdown phone. Our next question comes from a line of Frederick Bastion with Raymond James.
As a reminder, if you'd like to ask a question at this time, please press star 1 1 on your touchtone phone.
Our next question comes from a line of Frederick Bastion with Raymond James.
Maurice Choy: Good morning, guys. Deal velocity has picked up materially, as discussed earlier. And you mentioned in your prepared remarks that you have incremental sales processes in queue for the second half. Is your pipeline of investment opportunities comparable? I mean, could we see BIC invest another $1.3 billion in assets in the back half?
Hi, good morning, guys.
Um, deal deal velocity is picked up materially, as as discussed earlier, and you mentioned in your prepared remarks, that you have, uh, incremental sales processes in queue for the second half is your pipeline of investment opportunities comparable. I mean, could we see bip invest in other 1.3 billion in in, in, in assets on a, in the back half.
Sam Pollock: Well, I don't usually like to make predictions like that. You know, as you recall, we've said over the last, I think, two or three quarters that our pipeline was as full as it's ever been. And obviously, I think that's borne out. You know, today it's still full, probably not to the same degree as it was in the last couple of quarters. So I think, you know, we might see a little bit of a drop in scale of transaction flow. But nonetheless, we do have, you know, multiple transactions that we're currently pursuing that I would expect would take place in the next quarter or two.
So I don't usually like to make predictions like that. Um, you know, I yeah, as you recall, we've said over the last, I think, 2 or 3 quarters that our pipeline was as full as it's ever been. And and, and obviously, um, I think that's borne out. Um,
Maurice Choy: Okay, thanks for that, Color. Now, my second question is around liquidity. You mentioned $5.7 billion at the end of the second quarter if you include the sale proceeds that you've secured. Does that include the investments that you've also announced? Or just wanted to get a bit of clarification as what your liquidity position would be on a pro forma all those deals announced?
You know, today it's still full probably not to the same degree as it was in the last couple quarters. So I think, you know, we might see uh, a little bit of a uh Drop Inn in scale of of, of transaction flow. But nonetheless, we we do have, um, you know, multiple transactions, uh, that we're currently pursuing that. I would expect would take place in the next quarter or 2.
Okay, thanks for that color. Now, uh, my second question is around the um liquidity you mentioned.
um, 5.7 billion at the end of the co the second quarter if you, um, include the sale proceeds that you've secured, um,
Sam Pollock: Yeah, Fred, it's Dave here. I can take that one. The $5.7 billion you referenced was as at June 30th. And for the total business, at the corporate level, we had $2.4 billion of liquidity. What's not included in that number is the, you know, the commitments we've made on our new investments. So the $1.3 billion going out, nor the roughly $1.1 billion of sales that we've secured, that being the container terminals in Australia, PD Port, the second sell down of Triton, and the stabilized data centers. None of those have obviously been collected either. So I'd say we have pro forma relatively a similar amount of liquidity as we look for the balance of the year as we do today.
It it does that include the Investments that you've also announced or, um, just just wanted to get a bit of clarification as what your liquidity position, would be on a performer. Uh, all all those deals and apps. Yeah, Fred. It's Dave, here, I can, I can take that 1.
Um, the 5.7 billion reference was as at June 30th and for the total business at the corporate level, we had 2.4 billion dollars of liquidity.
What's not included in that number is the, you know, the commitments we've made on our new Investments. So, the 1.3 billion dollars going out nor the roughly 1.1 billion dollars of sales that we've secured
Maurice Choy: Okay, that's super helpful. Thanks, guys. That's all I have.
Uh that being the container terminals, Australia uh PD ports. Uh the second sell down of Triton and the data stabilized data centers. None of those have obviously been collected either. So I'd say we have pro-forma relatively a similar amount of liquidity as we look for the balance of the year as we do today.
Sam Pollock: Okay, thanks, Fred.
Okay, that's super helpful. Uh, thanks guys, that's all I have.
Liz: Our next question comes from Robert Hope with Scotiabank.
Devin Dodge: Morning, everyone. So a healthy portion of the midstream business is gas-focused. You know, however, the market's view of oil assets has shifted more positively here over the last couple of years. So I wanted to get a sense of how, when you're looking at midstream investments, is it still primarily gas-focused, or could we see some incremental focus on oil assets?
Sam Pollock: Hi, Robert. You know, we had the benefit of having Brian on the line from Calgary. So I think this is a good question to throw out to Brian. I mean, the short answer is, you know, we look at both, but Brian can probably add some more color of what he sees as the opportunities for the next little while. Brian, do you want to jump in?
Devin Dodge: Yeah, thanks, Sam. Look, I think, you know, Sam did mention we do continue to look at, you know, assets and opportunities across, you know, various commodities. You know, I think from an oil perspective, where we probably see the most opportunity today is investments inside our existing portfolio companies. You know, we are seeing, you know, continued growth from a number of our oil sands customers. And, you know, them looking at expansions, you know, it's creating the opportunity to look at, you know, expansions for a number of long-haul systems that we have today. So that's probably where, you know, from an investment perspective, we see the most opportunity from an oil standpoint.
Devin Dodge: But we definitely see, you know, lots of activity across the sector, really driven by new egress, you know, opening up, which has created the opportunity for a number of those customers to continue to grow.
Maurice Choy: I appreciate that. And then maybe shifting over to kind of data center investment. You did mention AI factories in Europe. But when we're thinking about the go-forward outlook for your investments there, are we seeing the size of campuses increase, just given the kind of the tailwinds that we're seeing in the sector? Or should we just continue to assume more of a, you know, cluster with a phased expansion?
Well, it depends on the customer. I mean, we have a particular skill in a number of businesses for building campus-style data centers. And we have a number of those land banks for those in place. But, you know, we are a solution provider for the large hyperscalers for some of those significant projects that they're looking to bring on, and particularly find power solutions and bring them, you know, to service quickly. So because we are in that world, you know, it is possible that we may bring in some large-scale projects as well. Though those would probably be done, you know, on a bespoke basis outside of some of our existing platforms. But that's something that absolutely we're focused on.
You know, we are a solution provider for the large, hyperscale or for some of those uh, significant projects that uh they're looking to bring on uh and particularly find Power Solutions and and and bring them you know to Service uh, quickly. So, um,
Because we are in that world, you know, it it is possible that we may bring in um some large scale projects as well. Those those were probably be done, you know, on a, uh, bespoke basis outside of some of our existing platforms but uh, that that's something that absolutely we're focused on.
Thank you.
Our next question comes from Amber jaw with City.
Um, hi, it's Ryan LaVine, it's it's city um uh a couple couple questions in terms of do you speak more broadly about your general interests?
In in assets that have both renewable assets and more traditional energy infrastructure. And if you were to pursue a type that type of deal, how that would work within the Brookfield. Umbrella.
so Ron, I I missed a
Just 1 of the words there. What kind of mystery masses were you saying?
Not midstream assets. If you're looking at an energy infrastructure company that had both traditional energy infrastructure assets as well as renewable assets, how you could evaluate that within the broader umbrella of Brookfield and bit.
Oh, I see. Um,
well, well, look, I guess it. Uh, it, it depends on the situation. Um,
Yeah to extent that it's a you know uh regulated type utility that might have a integrated business of both uh conventional renewable assets that might fall within our purview or maybe our super core funds purview. Um,
what pocket of capital would, um, fund a particular investment is that, uh, within Brookfield, all our groups work very closely together
and,
Uh, we're able to leverage the skill sets that exist within the renewable group, as well as the skill sets that exist within our, you know, midstream and utility businesses to, you know, source originated and complete, you know, either large or complicated transactions. And so that, that's something that, you know, takes place often. And, um, and, and probably, you know, and, and while your question is maybe, uh,
Is a good 1 is today we are seeing that Nexus where uh a lot of solutions. Particularly for the data center, uh sector are requiring a combination of both. Um,
Conventional fuse up fuels. IE gas combined with Renewables uh to complete the uh, the powering of the site. So we are doing that. I think we have the best franchise in the uh in the globe for that. Uh, and um, hope the uh, that will lead to a lot of transactions.
Appreciate that. And then 1 follow up in that vein, there's been headlines around AES. Is there any comments that you're able to to make or anything you're willing to share around that potential opportunity?
Yeah. We well, as you know, we don't comment on transactions and so there's nothing. I can really say about that particular situation.
Okay, thank you.
Okay, thank you.
That concludes today's question and answer session. I'd like to turn the call back to Sam Pollock for closing remarks.
All right. Well thank you Liz and thank you for everyone who joined our call this morning in the middle of summer. We hope uh you've enjoyed it so far and uh uh can take some further time off in August and uh we look forward to providing you a a full update at our annual investor Day event in Toronto on September 25th. We look forward to seeing you there and uh in the meantime uh take care. Thanks.
This concludes today's conference call, thank you for participating. You may now disconnect