SEQI Sequoia Economic Infrastructure Income Fund Limited

TIDMSEQI

RNS Number : 5725I

Sequoia Economic Infra Inc Fd Ld

13 August 2021

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES

13 August 2021

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

NAV update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 101.86 pence per share from the prior month's NAV of 101.57 pence per share, (being the 30 June 2021 cum-income NAV of 103.13 less the dividend of 1.5625 pence per share declared in respect of the quarter ended 30 June 2021), representing an increase of 0.29 pence per share.

A full attribution of the changes in the NAV per share is as follows:

 
                                        pence per 
                                          share 
--------------------------------------  --------- 
June NAV                                 103.13 
 Dividend declared for quarter ending     -1.56 
  30 June 2021 
 Adjusted opening NAV                     101.57 
Interest income, net of expenses          0.27 
FX movements, net of hedges               -0.10 
Increase in asset valuations              0.12 
July NAV                                 101.86 
======================================  ========= 
 

Portfolio update

As at 30 July 2021, the Company had cash of GBP100.1m and had drawn GBP83.8m on its GBP280m Revolving Credit Facility. The Company also had undrawn commitments on existing investments collectively valued at GBP128.8m. The Company's invested portfolio comprised of 65 private debt investments and 12 infrastructure bonds across 8 sectors and 31 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 9.0% and a cash yield of 6.0%. The weighted average portfolio life is approximately 4.3 years. Private debt investments represented 94% of the total portfolio and 52% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 99.0% of par. Investments which are pre-operational represented 13.5% of total assets.

The Company's invested portfolio remains geographically diverse with 47% located across the US, 21% in the UK, 27% in Europe, and 5% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy but has selectively invested in opportunities in Spain. The Company's pipeline of economic infrastructure debt investments remains strong and is diversified by sector, sub-sector, and jurisdiction.

At month end, approximately 100% of the Company's NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate resources to cover margin calls on its hedging book.

The Investment Adviser, the Investment Manager, and PWC, the independent valuation agent continue to observe the previously identified uplift in valuations of the assets where COVID-19 has impacted performance to materialise. This trend is expected to persist as economies continue to recover and countries further open up on the back of their vaccination programmes.

Further to the recent update provided in the Annual Results published on 5 July 2021, performance of the private school in Washington DC that is the main tenant on a property that the fund is financing (1.70% of NAV) has continued to be poor. In light of the ongoing underperformance of the asset, the loan has been further marked down this month. The Investment Advisor is engaging actively with the owner of the property, the school, and the fund's co-lenders on the project. The Investment Advisor notes that the debt amount is covered by the vacant possession valuation of the property, calculated on the basis that the property would continue to be used primarily for educational purposes (combined with other uses).

On 5 July 2021, the Company published its Annual Report for the year ended 31 March 2021 which is available on its website (see results presentation ). The Board was pleased to announce a total NAV return of 13.5% in the year and an improvement to the portfolio's ESG profile year on year.

The Company's settled investment activities during July include:

   --      A $5.0m bond of Inmarsat, the largest UK satellite communications company; 

-- An additional GBP2.7m loan to Lloyds Development Limited, a hotel development in Glasgow; and

-- A EUR28.4m takeout financing to Ventus, a German real estate developer specializing in social infrastructure in Germany.

The following assets sold or prepaid in July:

-- A EUR16.4m bridge loan to Ventus, a German real estate developer largely leasing its properties to subnational German government entities with strong credit profiles.

Ordinary Portfolio Summary (15 largest settled investments)

 
 Investment name     Currency        Type    Ranking   Value       Sector     Sub-sector   Cash-on-cash          Yield 
                                                        GBPm                                      yield    to maturity 
                                                         (1)                                        (%)        / worst 
                                                                                                                   (%) 
 
                                                                Transport        Rolling 
 Madrid Metro           EUR      Private      HoldCo    66.4       assets          stock           1.30           5.40 
                                                                                Landfill 
 Infinis Energy         GBP      Private      Senior    65.0   Renewables            gas           5.00           5.00 
 AP Wireless                                                                     Telecom 
  Junior                EUR      Private        Mezz    60.5          TMT         towers           4.22           6.12 
 Bannister Senior                                                                 Health 
  Secured               GBP      Private      Senior    55.8      Accomm.           care           6.54           6.54 
                                                                             Electricity 
 Bulb Senior TL         GBP      Private      Senior    54.7      Utility         supply           6.59           7.02 
 Hawkeye Solar                                                                     Solar 
  HoldCo                USD      Private      HoldCo    54.3   Renewables         & wind           8.04           7.84 
 Hawaiki Mezzanine                                                              Undersea 
  Loan                  USD      Private        Mezz    54.1          TMT          cable           8.45           9.50 
 Tracy Hills TL                                                              Residential 
  2025                  USD      Private      Senior    53.0        Other          infra           8.09           8.09 
 AP Wireless US                                                                  Telecom 
  Holdco                USD      Private      HoldCo    49.8          TMT         towers           6.00           6.00 
 Expedient Data 
  Centers               USD      Private      Senior    46.2          TMT   Data centers           5.57           5.75 
 Scandlines 
  Mezzanine             EUR      Private      HoldCo    44.1    Transport        Ferries           7.05           7.99 
 Sacramento Data 
  Centre                USD      Private      Senior    43.9          TMT   Data centers           6.98           6.94 
 Euroports 2nd 
  Lien 2026             EUR      Private        Mezz    43.4    Transport           Port           7.77           7.80 
 Care4U Senior                                                                    Health 
  Secured               EUR      Private      Senior    43.2      Accomm.           care           6.00           6.00 
 Kenai HoldCo 
  2024                  EUR      Private      HoldCo    39.6        Power      Base load           0.00          12.26 
 

Note (1) - excluding accrued interest

The Company's monthly investor report and additional portfolio disclosure will be made available at http://www.seqifund.com/ .

LEI: 2138006OW12FQHJ6PX91

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

For further information please contact:

   Sequoia Investment Management Company                              +44 (0)20 7079 0480 

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Greg Taylor

Anurag Gupta

Jefferies International Limited +44 (0)20 7029 8000

Gaudi le Roux

Neil Winward

   Tulchan Communications (Financial PR)                                    +44 (0)20 7353 4200 

Martin Pengelley

Elizabeth Snow

Laura Marshall

   Praxis Fund Services Limited (Company Secretary)                  +44 (0) 1481 755530 

Matt Falla

Katrina Rowe

About Sequoia Economic Infrastructure Income Fund Limited

The Company seeks to provide investors with regular, sustained, long-term distributions and capital appreciation from a diversified portfolio of senior and subordinated economic infrastructure debt investments. The Company is advised by Sequoia Investment Management Company Limited.

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August 13, 2021 02:00 ET (06:00 GMT)