1. 1
EIM CAPITAL PARTNERS
-Energy Investment Mexico -
Project Financing Challenges for Power -
Introductory Remarks
Royal Daniel – Managing Partner Power, EIM Capital
Cuartra Confrencia IEL-ANADE 25/26 August 2016

2. 2
Table of Contents
1. EIM Capital – The Platform
2. Power Infrastructure Capital Requirements
3. Project Finance Structure
4. Problematic Project Agreements
5. Global Solar PV Pricing
6. Equity Return – Impact to Project Financing

3. 3
EIM Capital | The Platform
About EIM Capital:
EIM Capital (Energy and Infrastructure Mexico Capital) is a private equity investment fund focused exclusively in the Mexican energy sector. EIM
Capital was founded in anticipation of Mexico´s historic Constitutional Reform of 2013 for energy. Our goal is the development of a world class
portfolio built by talented teams, strategic partnerships, and identification of high value assets within four main verticals:
I. Power
 Promote projects engaged in developing power generation; mainly combined cycle, co-generation and renewable
energies
 Electric transmission and grid reinforcements projects
 Sponsor & seed experienced power development teams
II. Midstream Infrastructure
 Closely work with Round 1 E&P companies and Pemex to develop on and offshore infrastructure assets
 Sponsor & seed experienced midstream teams
III. Exploration and Production
 Enter Round 1 bids with best consortium of operating companies, financiers, and Mexican service companies
 Sponsor & seed experienced E&P management teams
IV. Special Situations
 Focus on building of teams and launching energy services companies not needing Government approval
 Sponsor and seed future market leaders in energy sector
 EIM Capital is the only Mexican energy-focused private equity fund in Mexico diversified across the entire industry value chain
 Experienced team with 100+ years in Mexico and abroad with 50+ years of Private Equity / energy investing experience
 Comprehensive risk mitigation of investments through a strong operational platform, continued hands-on guidance, and dedicated Mexican
power market knowledge
 Delivers projects to international Private Equity (PE) standards, procedures and processes, including FCPA, ILPA, AML, FATCA, and RIA
 EIM Capital’s partnerships provide an important seal of approval for industry leaders who view EIM Capital not only as a strong vehicle for
investment, but also as a unique provider of integrated solutions

4. 4
Power Infrastructure Capital Needs Require both Public and Private Funds
PRODESEN estimates US$ 120 Billion investment requirement over next 15 Years:
Investment requirements over next 5 years (2016 – 2020) is US$ 55 Billion
• Generation - US$ 42 Billion
• Transmission - US$ 6 Billion
• Distribution - US$ 7 Billion
• Annual Average is US$ 10 Billion/year
PRODESEN Estimated Investment by Category 2016 - 2030
(Billions of US$ @ 18.8 MXN Peso F/X) TOTAL
CATEGORY 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2016 - 2030
Generation 8.3 6.9 9.2 10.1 7.4 2.3 2.4 3.2 4.4 5.5 4.8 4.7 6.9 6.5 6.9 89.5
Transmission 0.9 1.8 1.2 0.9 1.3 0.6 0.7 1.2 0.9 0.9 0.9 0.7 0.5 0.5 0.7 13.7
Distribution 1.6 1.9 1.6 1.1 0.9 0.7 0.9 1.0 1.0 0.9 0.8 0.9 1.0 1.0 0.9 16.2
TOTAL 10.8 10.6 12.0 12.1 9.6 3.6 4.0 5.4 6.3 7.3 6.5 6.3 8.4 8.0 8.5 119.4
Cummulative 10.8 21.4 33.4 45.5 55.1 58.7 62.7 68.1 74.4 81.7 88.2 94.5 102.9 110.9 119.4 119.4

5. 5
Typical Project Finance Structure – Rely on the strength of contracts
Key Project Agreements include Power Purchase Agreement, Natural Gas Supply, and Natural Gas Transport

6. 6
Problematic Project Agreements – Mexican Market
Agreements Challenge
Power Purchase Agreement • Credit worthy entity
• Long term (Debt refinance risk for shorter terms)
• Fuel formula pricing risk passed to electric off-taker including currency
adjustment
• Match of minimum fuel volumes of fuel supply
Natural Gas Transport • Developing market – Open Season Process New Project TBD
• Firm Transport Capacity
• Last Mile Interconnection – ROW
Natural Gas Supply • Firm Supply
• Formula price and minimum volumes matching PPA
Electric Wheeling • Development of tariff rates
Land Acquisition/ Lease • Clear and insurable land title

7. 7
Global Solar PV Pricing – Lowest Winning Utility Scale PV Tenders (2015 & 2016/Q1)

8. 8
Equity Returns – Impact to Project Financing for Power Projects
Are the leverage project returns sufficient to attract investors and project debt?
New lower generation prices are great for reducing the price of electricity
Public Power Tenders are at low range of equity returns. E&Y estimates for the CENACE 2nd Auction:
• 4 to 7% leverage US$ IRR return
• Competitive pricing to be at US$ 35/ MWH
• Wind Projects to have more attractive leveraged returns than Solar PV
• Solar PV faces a 15% additional tax for PV panels
The expected leverage US$ IRR return is at project finance debt interest rates.
• Equity return should not equal debt return as risks profiles are substantially different.
• Equity should be rewarded for taking development, bidding, and operating risks.
Equity return threshold for international infrastructure funds in US$ is in low teens. High teens for Private Equity.
Current bid prices are generally too low for the international investment funds. Debt solutions will tend
to be non-Mexico corporate debt to be competitive.

9. 9
Royal Daniel, Managing Partner Power of EIM Capital
rdaniel@eimcapital.com.mx
Office: 52 (55) 5202-2739 Cell: +1 (973) 828-5034
Lomas de Chapultepec, Mexico DF
www.eimcapital.com.mx
THANK YOU
Royal Daniel (Managing Partner Power)*: prior to joining EIM Capital, Royal was MD of Power Engineers Asia, a global leader in technical consulting for power generation
completing the construction of 4,000 MW as Owner’s Representative, 1,500 MW as Lender’s Engineer. Previously Mr. Daniel held numerous senior and technical positions
at PSEG Global, Fortune 200 Independent Power Producer, including head of project development, asset management, project restructuring and asset rationalization
where he returned over US$1 billion in equity to investors. Royal is head of EIM Capital’s power efforts.
Roy holds a JD from Suffolk University Law School, MS Accountancy from Bentley University, and both a MS and BS in Engineering from North Carolina State University.