SEQI Sequoia Economic Infrastructure Income Fund Limited

TIDMSEQI

RNS Number : 0045P

Sequoia Economic Infra Inc Fd Ld

14 October 2021

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

14(th) October 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 102.94 pence per share from the prior

month's NAV of 102.09 pence per share, representing an increase of 0.85 pence per share. A full attribution of the changes in the NAV per share is as follows:

 
                                   pence per 
                                     share 
---------------------------------  --------- 
August NAV                          102.09 
Interest income, net of expenses     0.69 
FX movements, net of hedges          0.11 
Increase in asset valuations         0.05 
September NAV                       102.94 
=================================  ========= 
 

Portfolio update

As at 30 September, the Company had cash of GBP111.9m and had drawn GBP90.2m on its GBP280m revolving credit facility. The Company also had undrawn commitments on existing investments collectively valued at GBP39.6m. The Company's invested portfolio comprised of 63 private debt investments and 11 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 8.6% and a cash yield of 5.9%. The weighted average portfolio life is approximately 4.3 years. Private debt investments represented 95% of the total portfolio and 50% of the portfolio comprised floating rate assets. Investments which are pre-operational represented 10% of total assets. The Company's invested portfolio remains geographically diverse with 48% located across the US, 19% in the UK, 28% 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 99% 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.

Overall, the portfolio continues to perform well. As economies re-open, a number of under -- performing assets in the transport sector especially have seen significant improvements in their revenues. In addition, the Talen Energy bonds, which fell sharply last month, have partially recovered. For example, the Talen 10.5% 2026 bonds are up nearly 20% over the course of September. Given the recent media commentary around the UK energy market, SEQI has been in active dialogue with Bulb Energy Limited ("Bulb"). The drawn portion of SEQI's loan to Bulb is GBP55.0 million (approximately 2.9% of NAV). The loan is structured as senior ranking debt, secured on all the assets of Bulb, and accounts for all the senior ranking debt of Bulb. In the opinion of the Investment Adviser, the value of these assets exceeds the drawn loan amount. SEQI continues to actively engage with Bulb Energy Limited on an ongoing basis. Our investment in Salt Lake Potash (1.9% of NAV) is currently seeking further funding by means of an equity issue to address additional cost and ramp up requirements at their potash project. The investment advisor is actively engaging with the company on contingency plans in the event that the funding gap not be fully addressed.

The Company's settled investment activities during September include:

   --      An additional $35.0m to Brightline, a privately owned passenger rail project in Florida; 

-- A $50m loan to Perc HoldCo, to finance the acquisition of energy efficiency assets linked to steel production at two steel mills in the USA.

The following assets sold or prepaid in September:

   --      A full sale of GBP12.1m of Heathrow 2027 bonds, a UK Airport; 

-- A partial GBP5.0m sale of American Shipping Company (AMSC) 2025 bonds, a US-based tanker company;

   --      A partial GBP6.0m sale of Navigator Holdings 2025, a US-based specialist shipping company; 
   --      A $31.5 primary loan to Sunrun Hera, a US-based manufacturer of solar energy equipment; 

-- Heathrow 2027, AMSC 2025 and Navigator Holdings 2025 were sold to mitigate any breach to our fixed-to-floating rate ratio.

Ordinary Portfolio Summary (15 largest settled investments)

 
 Investment       Currency        Type    Ranking   Value          Sector     Sub-sector   Cash-on-cash          Yield 
 name                                                GBPm                                         yield    to maturity 
                                                      (1)                                           (%)        / worst 
                                                                                                                   (%) 
 
                                                            Transport       Rolling 
 Madrid Metro     EUR         Private    HoldCo     66.9     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       60.9    TMT              towers        4.22           6.13 
 Hawaiki 
  Mezzanine                                                                 Undersea 
  Loan            USD         Private    Mezz       56.6    TMT              cable         8.35           9.05 
 Hawkeye Solar                                                              Solar 
  HoldCo          USD         Private    HoldCo     56.1    Renewables       & wind        8.05           7.84 
 Bannister 
  Senior                                                                    Health 
  Secured         GBP         Private    Senior     55.5    Accommodation    care          6.57           6.57 
 Tracy Hills TL                                                             Residential 
  2025            USD         Private    Senior     54.7    Other            infra         8.08           8.08 
 Bulb Senior TL                                                             Electricity 
  2022            GBP         Private    Senior     52.6    Utility          supply        6.89           10.41 
 Brightline       USD         Private    Senior     52.0    Transport       Rail           8.00           8.00 
 AP Wireless US                                                             Telecom 
  Holdco          USD         Private    HoldCo     51.4    TMT              towers        6.00           6.00 
 Expedient Data 
  Centers         USD         Private    Senior     47.8    TMT             Data centers   5.56           5.74 
 Sacramento 
  Data 
  Centre          USD         Private    Senior     45.3    TMT             Data centers   6.98           6.95 
 Scandlines 
  Mezzanine       EUR         Private    HoldCo     45.2    Transport       Ferries        0.00           9.23 
 Euroports 2nd 
  Lien 2026       EUR         Private    Mezz       43.8    Transport       Port           7.76           7.73 
 Care4U Senior                                                              Health 
  Secured         EUR         Private    Senior     43.5    Accommodation    care          6.00           6.00 
 

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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October 14, 2021 02:00 ET (06:00 GMT)