Further to the Announcement on 24 April 2017

RNS Number : 9691D

Sequoia Economic Infra Inc Fd Ld

03 May 2017

 

THIS ANNOUNCEMENT IS NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES (INCLUDING TO U.S. PERSONS, AS SUCH TERM IS DEFINED UNDER REGULATION S OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED, THE "SECURITIES ACT"), CANADA, AUSTRALIA, NEW ZEALAND, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

3 May 2017

Sequoia Economic Infrastructure Income Fund Limited (the "Company")

Ordinary Share Issue, Placing Programme, NAV update and Proposed Amendment to the Investment Policy

Further to the announcement on 24 April 2017 and in light of what the Board consider to be the growing set of attractive investment opportunities in the economic infrastructure debt market, the Board of Directors has resolved to proceed with a partially pre-emptive issue of Ordinary Shares seeking to raise £125 million (before expenses). The Directors have determined that the Ordinary Shares will be issued at an Issue Price of 105.5 pence per new Ordinary Share.

The Investment Adviser continues to see significant opportunities in the infrastructure debt market and the Board believes that it would be in the interests of the Company to raise further funds to take advantage of these opportunities. The Board believes that the current opportunities available to the Investment Adviser will enable the Company to further diversify the Group's existing portfolio, spread the fixed costs of running the Company across a wider base and increase secondary market liquidity for investors.

NAV update

The Board is pleased to announce that the latest unaudited NAV of the Company, as at 11 April 2017, is 102.86 pence per share. This includes a dividend of 1.5 pence per Ordinary Share which was declared (but not yet paid) on 20 April 2017. Adjusted for the dividend payment, the Company's unaudited NAV per share on 11 April 2017 would have been 101.36 pence (the "Adjusted NAV").

The Ordinary Share Issue (the "Issue")

The Issue will be implemented by way of an Open Offer, Placing and Offer for Subscription of Ordinary Shares. The target size of the Issue is £125 million before expenses.

The Issue Price of 105.5 pence represents a premium of approximately 4.1 per cent. to the Adjusted NAV per Ordinary Share of 101.36 pence and a discount of approximately 5.4 per cent. to the closing price of 111.5 pence per existing ordinary share on 2 May 2017.

The new Ordinary Shares issued pursuant to the Issue will rank pari passu in all respects with the existing Ordinary Shares. For the avoidance of doubt, the new Ordinary Shares will not be entitled to the interim dividend for the period ended 31 March 2017, declared on 20 April 2017 and expected to be paid on 24 May 2017. Subscribers for the new Ordinary Shares will however be entitled to any dividend in respect of the period ended 30 June 2017, which is expected to be declared in July 2017.

The Directors recognise the importance of pre-emption rights to Ordinary Shareholders. Accordingly, a substantial proportion of the new Ordinary Shares (being 119,172,138 new Ordinary Shares) are being initially offered to Qualifying Shareholders by way of an Open Offer pursuant to which they will be entitled to apply for 1 new Ordinary Share for every 5 existing Ordinary Shares held on the Record Date. The balance of the Ordinary Shares, together with any Ordinary Shares not allocated to Qualifying Shareholders under the Open Offer (including under an Excess Application Facility), will be made available, at the discretion of the Directors, under the Placing and/or Offer for Subscription.

The Directors may, at their discretion, issue up to a maximum number of approximately 151.7 million new Ordinary Shares pursuant to the Issue if the Directors, in consultation with the Investment Adviser and Stifel, believe that appropriate opportunities exist for the deployment of additional Issue proceeds, although there is no certainty that the maximum number of Ordinary Shares will be issued, even if sufficient investor demand exists.

The Company expects to publish a prospectus (the "Prospectus") in connection with the Issue shortly.

The Investment Adviser has compiled a target portfolio based on an investment pipeline of opportunities in excess of £440 million. Of the potential investments, 60% of the assets are senior secured debt instruments, 75% are floating rate debt instruments and 71% are based in the UK. The Company will invest the Net Issue Proceeds in accordance with the Company's Investment Policy. However, there can be no assurance that any of those investments will remain available for purchase after the Issue or, if available, at what price the investments can be acquired. The acquired portfolio, therefore, may be substantially different from the investment pipeline described in the Prospectus.

It is estimated that 75 per cent. of the Net Issue Proceeds will be invested within three to four months of Admission and that substantially the full amount of the Net Issue Proceeds will be fully invested within six months after Admission.

Benefits of the Issue

The Directors believe that proceeding with the Issue will have the following benefits:

·           provide the Company with additional capital to take advantage of the currently available pipeline of opportunities which should enable the Group to further diversify its existing portfolio;

·           create the potential to enhance the NAV per Ordinary Share of existing Ordinary Shares through new share issuance at a premium to NAV per Ordinary Share, after the related costs have been deducted;

·           grow the Company, thereby spread the Company's fixed running costs across a wider base of shareholders and benefit from the reducing scale of charges for the Investment Adviser, thereby reducing the total expense ratio;

·           a greater number of Shares in issue and a wider base of shareholders is likely to improve liquidity in the market;

·           increase the size of the Company which should help make the Company more attractive to a wider base of investors; and

·           the availability of Ordinary Shares to new investors, under the Ordinary Share Placing and Offer for Subscription, offers the prospect of a wider and more diversified shareholder base, and an increased opportunity to grow the Company with the benefits of scale and liquidity for Existing Shareholders. 

The Placing Programme

In addition to the Issue, the Directors have resolved to implement a Placing Programme for up to 200 million ordinary shares which will become effective on 3 May 2017. The Placing Programme is being created to provide the Company with flexibility should it wish to raise further capital as new investment opportunities arise over the next 12 months.

The Directors believe that instituting the Placing Programme will:

·           create the potential to enhance the NAV per Ordinary Share of existing Ordinary Shares through new share issuance at a premium to NAV per Ordinary Share, after the related costs have been deducted;

·           grow the Company, thereby spread operating costs over a larger capital base and benefiting from the reducing scale of charges for the Investment Adviser, which should reduce the total expense ratio;

·           partially satisfy market demand from time to time for Ordinary Shares and improve liquidity in the market for Ordinary Shares; and

·           enable the Company to raise additional capital quickly, in order to take advantage of investment opportunities that have been identified and which may be identified in the future.

Any future Net Placing Programme Proceeds raised will be invested in accordance with the Investment Policy. The Placing Programme Shares will be issued at an issue price calculated by reference to the prevailing Net Asset Value per Ordinary Share at the time together with a premium intended to cover, at a minimum, the costs and expenses of the relevant placing of Ordinary Shares (including, without limitation, any placing commissions). It is the intention of the Directors, however, that no Placing Programme Shares will be issued prior to 85 per cent. of the proceeds of the Issue being invested or committed.

Extraordinary General Meeting

The proposals in the Prospectus, including the proposed amendment to the Investment Policy (as below), are conditional on, amongst other things, the approval of the Resolutions by the Shareholders at the EGM. A separate circular (the "Circular") is expected to be published shortly. At the EGM the Company will seek from Shareholders the approvals necessary for the Issue and the Placing Programme to proceed, including resolutions to:

·      approve certain related party transaction/s which may arise with respect to certain Related Parties should they wish to participate in the Ordinary Share Placing and/or Offer for Subscription;

·      approve certain related party transaction/s which may arise with respect to certain Related Parties should they wish to participate in the Placing Programme;

·      approve the disapplication of pre-emption rights in respect of up to approximately 151.7 million Ordinary Shares for the purposes of the Issue and up to 200 million Ordinary Shares for the purposes of the Placing Programme;

·      approve certain amendments to the existing Articles of Incorporation in order to provide the Board with the requisite authority to implement a scrip dividend programme should it choose to do so and if authorised by an ordinary resolution of the Company; and

·      approve the adoption of an amended investment policy for the Company.

Proposed Amendment to the Investment Policy

The Company will seek approval from Shareholders to adopt an amended investment policy for the Company in order to (amongst other clarificatory changes) increase the jurisdictional diversification limit with respect to the United States from 50 per cent. to 60 per cent. of the Company's total assets.

The Investment Adviser is seeing a growing number of attractive opportunities in the U.S. due to a combination of macroeconomic and political factors. The immediate asset pipeline contains £100 million equivalent worth of North American investment opportunities. These projects are spread across Telecommunication, Media and Technology Infrastructure, Power and other infrastructure sectors of the Investment Policy.  Currently, the Investment Adviser has limited the number of investments in the United States in the Company's pipeline due to the current 50 per cent. maximum constraint contained in the Investment Policy, and the Directors believe an increase to 60 per cent. would benefit the portfolio by allowing the Company to access a wider range of transactions, with attractive risk/return profiles.

This proposed change is considered to constitute a material change to the Company's published Investment Policy. Therefore, in accordance with Listing Rule 15.4.8R, the Company is required to obtain prior approval by Shareholders at the EGM.

Expected Timetable - Ordinary Share Issue and Placing Programme

Open Offer
Record Date for entitlements to participate in the Open Offer	6.00 p.m. on 2 May 2017
Ex‑entitlement date for the Open Offer	8.00 a.m. on 3 May 2017
Open Offer opens	8.00 a.m. on 3 May 2017
Basic Entitlements and Excess CREST Open Offer Entitlements credited to CREST stock accounts of Existing CREST	As soon as practicable after 8.00 a.m. on 4 May 2017
Recommended latest time for requesting withdrawal of Basic Entitlements and Excess CREST Open Offer Entitlements from CREST	4.30 p.m. on 17 May 2017
Latest time and date for depositing Basic Entitlements and Excess CREST Open Offer Entitlements into CREST	3.00 p.m. on 19 May 2017
Latest time and date for splitting Open Offer Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 22 May 2017
Latest time and date for receipt of completed Open Offer Application Forms and payment in full under the Open Offer or settlement of relevant CREST instructions (as appropriate)	11.00 a.m. on 24 May 2017
Ordinary Share Placing and Offer for Subscription
Ordinary Share Placing and Offer for Subscription open	8.00 a.m. on 3 May 2017
Latest time and date for receipt of completed Offer for Subscription Application Forms and payment in full under the Offer for Subscription	3.00 p.m. on 24 May 2017
Latest time and date for receipt of placing commitments under the Ordinary Share Placing	Noon on 25 May 2017
The Placing Programme
Placing Programme opens	3 May 20171
Earliest date for Placing Programme Shares to be issued pursuant to the Placing Programme	3 May 20171
Publication of Placing Programme Price in respect of each placing of Placing Programme Shares	As soon as practicable before closing of each Placing
Admission and crediting of CREST accounts in respect of each placing of Placing Programme Shares	8.00 a.m. on each day Placing Programme Shares are issued
Dispatch of definitive share certificates	Approximately 14 days following (where applicable) Placing Programme Admission
Last date for Placing Programme Shares to be issued pursuant to the Placing Programme	2 May 2018
Other key dates
Results of the Open Offer, Ordinary Share Placing and Offer for Subscription announced	26 May 2017
Admission of the Ordinary Shares to the Official List and commencement of dealings on the London Stock Exchange	8.00 a.m. on 31 May 2017
CREST accounts credited in respect of Ordinary Shares to be held in uncertificated form	On or around 31 May 2017
Dispatch of definitive share certificates in respect of Ordinary Shares (where applicable)	On or around 2 June 2017
EGM meeting dates2
Latest time and date for receipt of Forms of Proxy	9.30 a.m. on 17 May 2017
EGM	9.30 a.m. on 19 May 2017

Notes:

1.     It is the intention of the Directors, however, that no Placing Programme Shares will be issued prior to 85 per cent. of the proceeds of the Issue being invested or committed.

2.     The Circular will be published following publication of the Prospectus containing details of the Resolutions for which the Company will seek Shareholder approval.

The dates and times specified above are subject to change. In particular, the Directors may (with the prior approval of Stifel) bring forward or postpone the closing time and date for the Issue. In the event that a date or time is changed, the Company will notify persons who have applied for Ordinary Shares or Placing Programme Shares of changes to the timetable either by post, by electronic mail or by the publication of a notice through a Regulatory Information Service. References to times are to London times unless otherwise stated.

Admission to trading

Application will be made to the UK Listing Authority and the London Stock Exchange for Admission. Subject to, amongst other things, the Minimum Net Proceeds having been raised under the Issue, it is expected that settlement of any such Ordinary Shares and Admission will become effective on or around 8.00 a.m. on 31 May 2017 and that dealings in the Ordinary Shares will commence at that time.

Further details

The ticker for the Ordinary Shares is SEQI. The ISIN for the Ordinary Shares (which includes the Placing Programme Shares) is GG00BV54HY67 and the SEDOL is BV54HY6. The ISIN of the Basic Entitlements is GG00BDHYT202 and the SEDOL is BDHYT20. The ISIN of the Excess CREST Open Offer Entitlement is GG00BDHYT319 and the SEDOL is BDHYT31.

Stifel Nicolaus Europe Limited is acting as sole sponsor and bookrunner to the Company.

A copy of the Prospectus, when published, will be submitted to the National Storage Mechanism and will shortly thereafter be available for inspection at: www.morningstar.co.uk/uk/nsm as well as on the Company's website at http://www.seqifund.com/downloads.

Defined terms used in this announcement shall (unless the context otherwise requires) have the same meaning as set out in the Prospectus.

For further information please contact: 

Sequoia Investment Management Company Steve Cook Dolf Kohnhorst Randall Sandstrom Greg Taylor	[phone]
Stifel Nicolaus Europe Limited Neil Winward Mark Bloomfield Gaudi Le Roux	[phone]
Praxis Fund Services Limited (Company Secretary) Shona Darling	[phone]

About the Company

Sequoia Economic Infrastructure Income Fund Limited is a Guernsey-incorporated closed-ended investment company whose Ordinary Shares are traded on the Main Market of the London Stock Exchange. The Company's investment objective is to provide its shareholders with regular, long-term distributions by generating exposure to senior and subordinated economic infrastructure debt and related and/or similar assets across a diversified range of jurisdictions, sectors and sub-sectors. The Company's Ordinary Shares were admitted to trading on the Main Market of the London Stock Exchange on 3 March 2015.

IMPORTANT NOTICES

This announcement contains Inside Information as defined under the Market Abuse Regulation (EU) No. 596/2014.

Neither this announcement nor the information contained herein is for release, publication or distribution, directly or indirectly, in or into the United States, the Republic of South Africa, Canada, Australia, New Zealand or Japan or any other jurisdiction where to do so might constitute a violation of the relevant laws or regulations of such jurisdiction. The securities referred to herein have not been and will not be registered under the relevant securities laws of any such excluded territory.

This announcement does not contain, constitute or form part of an offer for sale of, resale of, transfer of or delivery of or the solicitation of an offer to purchase directly or indirectly, securities in the United States or to, or for the account or benefit of a  U.S. Person (as defined in Regulation S of the Securities Act). The securities referred to herein have not been, and will not, be registered under the Securities Act or any other applicable securities laws of, or with any securities regulatory authority of, any state or other jurisdiction of the United States, and may not be offered, sold, resold, transferred or delivered, directly or indirectly, in the United States or to, or for the account or benefit of, any U.S. Person absent registration or an applicable exemption from the registration requirements of the Securities Act.  The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended, and neither International Fund Management (the "Investment Manager") nor Sequoia Investment Management Company (the "Investment Adviser") will be registered as an investment adviser under the U.S. Investment Advisers Act of 1940, as amended.  Consequently, investors will not be entitled to the benefits and protections of the U.S. Investment Company Act of 1940, as amended or the U.S. Investment Advisers Act of 1940, as amended.  The shares of the Company will be offered and sold only to non-U.S. Persons outside the United States in reliance on Regulation S under the Securities Act.  There will be no offer of the Company's securities in the United States.  The distribution of this document may also be restricted by law in other jurisdictions.

This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe for any ordinary shares or any other securities nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract.

The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

Subject to certain exceptions, the securities referred to herein may not be offered or sold in the United States, the Republic of South Africa, Canada, Australia, New Zealand or Japan or to, or for the account or benefit of, any national, resident or citizen of the United States, Canada, Japan, Australia, New Zealand or the Republic of South Africa. There will be no offer of the ordinary shares in the United States, Canada, the Republic of South Africa, Japan, Australia or New Zealand.

In member states of the European Economic Area (the "EEA"), this announcement is directed only at (a) persons who are "qualified investors" ("Qualified Investors"), being persons falling within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) (as amended, including by Directive 2010/73/EU, to the extent such amendments have been implemented in the relevant Member State and including any relevant implementing measure in the relevant Member State); (b) in the United Kingdom, Qualified Investors who are persons who (i) fall within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"); (ii) fall within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc") of the Order; or (iii) are persons to whom it may otherwise be lawfully communicated (all such persons together being referred to as "Relevant Persons").  This announcement must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.

Stifel Nicolaus Europe Limited ("Stifel"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company and no one else in connection with the potential equity issue. Stifel will not regard any other person as its client in relation to the potential issue and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for providing advice in relation to the potential issue, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

Neither Stifel nor any of its directors, officers, employees, advisers, affiliates or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or its subsidiary, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith.

The Company is incorporated in Guernsey and has been registered as a registered closed-ended collective investment scheme under the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. It is suitable only for professional or experienced investors, or those who have taken appropriate professional advice.

Regulatory requirements which may be deemed necessary for the protection of retail or inexperienced investors, do not apply to listed funds. By investing in the Company you will be deemed to be acknowledging that you are a professional or experienced investor, or have taken appropriate professional advice, and accept the reduced requirements accordingly.

You are wholly responsible for ensuring that all aspects of the Company are acceptable to you. Investment in listed funds may involve special risks that could lead to a loss of all or a substantial portion of such investment. Unless you fully understand and accept the nature of the Company and the potential risks inherent in it you should not invest in the Company.

Further information in relation to the regulatory treatment of listed funds domiciled in Guernsey may be found on the website of the Guernsey Financial Services Commission at http://www.gfsc.gg/The-Commission/Pages/Home.aspx.

 

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