Under the terms of the management agreement, MIIF compensates MIMAL for managing its investments through base fees and performance fees. These fees are calculated for each quarter ending on 31 March, 30 June, 30 September and 31 December of each year.

Base fee

The base fee is calculated on the following basis:

• 1.5% per annum of MIIF’s Net Investment Value*
• Payable quarterly in arrears

Fee rebates

Where a member of the Macquarie Group is entitled to be paid a base management fee for the management of any investment held by MIIF, the base fee payable by MIIF shall be reduced by MIIF’s share of the actual base management fee payable to that member of the Macquarie Group in relation to the management of that investment. This is based on MIIF’s percentage holding in the investment, provided that the base fee payable to MIMAL shall not be reduced to an amount less than zero.

Base fee examples

The following examples are for illustrative purposes and do not reflect MIIF's position at a particular time.

	Base fee period 1	Base fee period 2
(A) Average market capitalisation over the last 15 SGX-ST trading days of the quarter	$1,190,109,000	$1,202,906,000
(B) External borrowings at the end of the quarter	$0	$150,000,000
(C) Cash or cash equivalents at the end of the quarter	$50,000,000	$85,000,000
(D) Firm commitments to invest in future investments at the end of the quarter	$115,000,000	$0
(E) MIIF % holding in an investment managed by a Macquarie Group entity at the end of the quarter	25%	25%
(F) Base management fee paid or payable by an investment of MIIF to a Macquarie Group entity for the quarter	$1,000,000	$1,000,000
Number of days in the quarter	91	92

 

Base fee period 1		Base fee period 2
Net Investment Value at the end of the quarter: = A + B – C + D = $1,190,109,000 + $0 – $50,000,000 + $115,000,000 = $1,255,109,000 Base fee for the quarter: = (Net Investment Value x 1.5% x 91/365) – (E x F) = ($1,255,109,000 x 1.5% x 91/365) – (25% x $1,000,000) = $4,443,764		Net Investment Value at the end of the quarter: = A + B – C + D = $1,202,906,000 + $150,000,000 – $85,000,000 + $0 = $1,267,906,000 Base fee for the quarter: = (Net Investment Value x 1.5% x 92/365) – (E x F) = ($1,267,906,000 x 1.5% x 92/365) – (25% x $1,000,000) = $4,543,727

* Net Investment Value is the average market capitalisation over the last 15 SGX-ST trading days of the quarter; plus
• the total external borrowings at the end of the quarter; less
• the cash or cash equivalents at the end of the quarter; plus
• firm commitments to invest in future investments at the end of the quarter.

Performance fees

1. Strong alignment with shareholders interest – we only get rewarded after shareholders are rewarded i.e. outperformance to a benchmark of 8%.

2. The fee will be reduced by any deficit of MIIF's performance to the benchmark. And this carries on in perpetuity.

The performance fee is calculated quarterly on the following basis:

• If the return on the shares for a quarter (including the reinvestment of all dividends) is greater than zero and exceeds the benchmark return, the performance fee is equal to;
• 20% of the return above the benchmark return for the quarter. If the return is less than the benchmark return in any quarter, the amount of the deficit is carried forward i.e. Performance fee = 20% x (return - benchmark return - deficit brought forward);
• Payable quarterly in arrears; and
• The performance fee is payable to the Manager in cash. MIMAL may apply to invest all or a portion of the performance fee in MIIF shares.