Application of International Best Practices: ILPA

In order to align incentives and provide security for investors, Ainda will seek how to successfully adopt the Institutional Limited Partners Association (ILPA) standards.

Organizational Structure

Ainda has the operational structure to manage, control and support investment performance.

Management

Investment Management

  • Portfolio management
  • Promotion
  • Asset performance monitoring
  • Risk evaluation

Regulation and Transparency

  • Corporate Governance
  • Reports (valuation and justification of investment objectives)
  • Periodic performance evaluation

Creation, Monitoring and Analysis of Investments

  • Market analysis
  • Return evaluation
  • Contractual Covenants
  • Promotion (channeling)
  • Exit strategy

Control

Asset support and operations

Trustee

  • Accounting and reports
  • Cash handling
  • Purchase/sale execution

Common Representative

  • Monitoring of Trust operations

External Auditor

  • Accounting Audit

Independent appraiser

  • Independent valuation of assets

Operative Partners

  • Creation, co-investment and Project operation

Back Office

  • Treasury, accountability and capital calls

Relevant documents

AINDA Presentation
Prospecto Definitivo
1Q 2018

Date: May 24, 2018

Structure’s Competitive Advantages

Investment Strategy.

  1. Investments in greenfield or brownfield projects that can increase long term profitability.
  2. Project finance oriented strategy.
  3. Negotiation, development and signature of international strategic alliances to develop projects through strategic control and competitive advantage in the risk / return ratio.
  4. Brownfields: Have a Strategic Partner, operator or other investor, while a joint participation of at least 20% during the first 2 years and then 10%.
  5. Greenfields: Holders meeting must approve acquiring control over a project investment.

Size.

  1. Additional subscription option of subsequent series for projects representing more than 20% of the maximum amount of the Series A.
  2. This option can be considered as a co-investment for investors in projects in which they want to increase their participation.

Management fee.

  1. Competitive Management Fee 1.5% (market average = 1.66%).
  2. Series B1 management fee is 0.75% and Series B2 is 0.65% over invested capital
  3. Fees from parallel vehicles, co-investors and portfolio companies, reduce the Management Fee.

Hurdle rate.

  1. Ainda contemplates a differentiated return according to the type of risk that an investment is exposed to, aligning the incentives of the GP and those of the Investor. (Brownfields: 8% in USD and 10.5% in MXN; Greenfields with EPC: 9% in USD and 11.5% in MXN; and Greenfields without EPC: 10% in USD and 12.5% in MXN)
  2. Considering dollars in the matrix means Ainda does not benefit from a depreciation of the peso.

Fibra – E.

  • Possibility to sell or convert assets into Fibra E as an exit options  implies a valuable alternative.
  • Approval of 90% of the holders meeting is required in order to:
    • Obtain cash resources that represent at least 25% of the Divestment.
    • Register certificates in the RNV.
    • Receive in cash an amount equivalent to at least 50%.

Investment process.

  • The inclusion of an investment process detailed in Ainda’s “Prospecto de Colocación”, makes compliance mandatory and auditable.

Technical Committee and access to information.

  1. Ainda appoints six industry leaders as Independent Members of CKD.
  2. Ainda limits to five the number of non-independent members, thus granting the majority to investors and independent members.
  3. Investment Memorandum must be delivered to the members prior to the corresponding session.

Compensation and dividends.

  1. The compensation and salaries policy is aligned to market standards and based on a third party study.
  2. In case of dividends, investors will receive a 30% through a reduction in the Management Fee, as a result of:
      • Issuance of Series B
      • Fees charged to Third Party Co-investors and Promoted Companies
      • Fees charged to Parallel Vehicles, promotions and subsequent offers

Sale.

  • In case of a change of control, shareholders will receive 20% of the difference between the sell price and the book value of Ainda.

Partnership.

  • Ainda’s Shareholders Agreement regulates, among others, shareholders rights and obligations and enables business continuity.