Macquarie in Brazil

1. Macquarie in Brazil Presentation to Department of Foreign Affairs and Trade Seminar Jim McMeckan 16 August 2001

2. Agenda • Macquarie’s international strategy • Macquarie Brazil • Why Brazil? • Market observations

3. London Frankfurt Toronto Chicago Vancouver Tianjin Munich Tokyo New York San Francisco Seoul Shanghai Jupiter Hong Kong Kuala Lumpur Singapore Jakarta ~ Brisbane Sao Paulo Perth Sydney Johannesburg Adelaide Auckland Cape Town Melbourne Wellington Macquarie’s International Strategy • Macquarie is active internationally with a presence in 22 international locations

4. Macquarie’s International Strategy • Macquarie’s income from international activities have increased 12 fold over the last 5 years and now account for 38% of the bank’s profit • As with other leading Australian companies, Macquarie is looking internationally for growth Total Operating Income (excluding earnings on capital) (A$ million)

5. Macquarie Brasil • Macquarie established its São Paulo office in 1999 and now operates in the following areas: • Agriculture commodities – commenced1999 • Risk management solutions and products for primary producer marketed through Banco do Brasil • Equity derivatives – commenced early 2001 • Risk management products for equity investors • Investment banking – new initiative • Infrastructure funds management, advisory, asset finance and structured finance

6. Macquarie Brasil • Since late 2000, Macquarie has been working on establishing the Brazil Infrastructure Fund • A private equity fund that will invest in transport infrastructure including tollroads, rail, airports and seaports • Initial commitment of R$250 million (approx. A$200 million) • In-principle commitment for 35% of the initial commitment required by the Fund • Macquarie has been in discussion with leading Brazilian pension funds and expects further in-principle commitments as marketing efforts accelerate • First closing expected during 4th quarter 2001

7. Why Brasil?

8. Why Brasil? • Brazil has the largest economy in Latin America * An annual survey of 49 nations released by IMD based on executive opinion survey and economic and social statistics. Chile is the 3rd highest ranked “emerging market” nation. The relative scale of the Brazilian economy is highlighted by the fact that almost half of Latin America’s top 250 companies (by revenue) are domiciled in Brazil

9. Market Observations • Strong economic performance following the emerging market crisis of 1998, but slowdown expected for 2001 • Domestic energy shortage and rationing • Worldwide economic slowdown • Impact of Argentina and Turkey induced uncertainty on all emerging market economies • Characteristics of the Brazilian economy • Economic activity concentrated in the south-east • Large domestic market • Diversified production base

10. Market Observations • Large domestic economy leading to businesses that are often very focused on the domestic market • Export sector represents less than 8% of GDP. By way of comparison: • Australia - close to 20% • Chile - close to 30% • Korea - in excess of 40% • Businesses are not actively outward looking but normally receptive to new ideas • International investors need to be sympathetic to local issues. Consequently local partners and staff are important.

11. Market Characteristics • Strong latin business culture • Possibly more familiar to Australians than many other markets, e.g,. parts of Asia and the middle east • “Can do” attitude coupled with pragmatic approach to problem solving and dispute resolution • Civil versus common law system • Economy characterised by capital constraints and reliance on foreign investments • This creates opportunities and risks • Financial system is robust but capital markets are relatively undeveloped

12. Contacts • For further information, please contact: Sydney Ian Kay (612) 8232 3812 Melbourne Jim McMeckan (613) 9635 8346 São Paulo Walter Pye (55 11) 3168 5087