NAV and Investment Update

RNS Number : 0067G

Sequoia Economic Infra Inc Fd Ld

13 March 2020

 

13 March 2020

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 28 February 2020 and Investment Update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 106.36p from the prior month's NAV of 105.55p per share.

The changes in NAV arose primarily through:

· Interest income net of expenses of 0.74p;

· A decrease of 0.02p in asset valuations; and

· Unhedged FX gains of 0.09p.

As at 28 February 2020, the Company had cash of £68.5m and had drawn £224m on its £280m RCF. The Company also had undrawn commitments on existing investments collectively valued at £116.6m.

The Company's invested portfolio comprised of 60 private debt investments and 14 infrastructure bonds across 8 sectors and 30 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.3% and a weighted average life of approximately 4.1 years. Private debt investments represented 91% of the total portfolio and 70% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 96.4% of par. Investments which are pre-operational represented 13.0% of total assets.

The Company's invested portfolio remains geographically diverse with 49% located across the US, 15% in the UK, 30% in Europe, and 6% 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 the cash costs associated with its hedging activities.

The Company's settled investment activities during February include:

· An $65.0m secondary senior loan to Expedient Data Centers Senior Secured 2026 backed by a portfolio of 11 tenanted data centres in the US;

· An $32.0m primary loan to SAPA 2020-1A, an aircraft securitisation backed by a portfolio of 21 aircraft assets on lease to 19 lessees located in 19 jurisdictions;

· An additional $2.0m disbursement to Bourzou Equity, a company created for the construction of a data centre in Virginia;

· An additional NOK 2.0m secondary acquisition of Exmar's variable rate bonds maturing in 2022, backed by LNG and LPG vessels; and

· An additional $14.2m disbursement to Sunrun Radcliffe, a leader in the US residential solar market.

The following investments were sold or prepaid in February:

· £20m Prism BidCo Senior Secured 2020, a portfolio of ten neurorehabilitation care homes in the UK; and

· $2m Apollo Aviation 2016-2 B, a USD aircraft securitization.

Post 28 February 2020 NAV Date activity

On 9 March 2020, the Company received £296.6m of net proceeds from the recent oversubscribed equity issue. The Board is therefore pleased to confirm that 267,857,142 new Ordinary Shares have since been issued at a price of 112.0 pence per share.

On 9 March, the Company repaid the outstanding £224m RCF balance in full using proceeds from the Initial Issue, and as of 13 March, the Company will have deployed an additional £44.2m in its pipeline of opportunities since closing, resulting in a net cash balance as at publication of this report of £28.4m. The total liquidity currently available to the Company is therefore £308.4m which includes cash and undrawn amounts on the Company's Revolving Credit Facility.

Update on COVID-19 and Market Summary

In light of the fluid COVID-19 situation, the Investment Adviser continues to assess its potential effect on the Company's portfolio.  At the time of the publication of this report, the Investment Adviser has not observed any material negative impacts on the valuation of the portfolio. The Investment Adviser and the Board are monitoring the situation closely and any potential impact on the portfolio on an ongoing basis. In terms of deployment, the Investment Adviser is continuing to see attractive economic infrastructure debt opportunities into which the remaining cash will be deployed.

Yet as more than 119,000 people have been infected by COVID-19 worldwide, global markets have struggled to find even footing after a rough month that hit the equity markets particularly hard with US stocks halting trading after falling 7% on 9 March.

Both the Federal Reserve and the Bank of England have announced emergency rate cuts of 50 bps to cushion the economic impact of COVID-19, yet the UK economy was showing signs of stagnation before the virus impact took hold with flat GDP growth in January compared to December.

The ECB has recently suggested that further loosening of monetary policy would only be effective in conjunction with coordinated fiscal stimulus by EU governments, but there has yet to be agreement amongst member states as to the best course of action to prevent further economic declines.

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m (1)	Sector	Sub-sector	Yield to maturity / worst (%)
AP Wireless Junior	EUR	Private	Mezz	58.6	TMT	Telecom towers	6.2
Hawaiki Mezzanine Loan	USD	Private	Mezz	58.2	TMT	Undersea cable	11.7
Salt Creek Midstream	USD	Private	Senior	53.7	Utility	Midstream	7.6
Expedient Data Centers	USD	Private	Senior	50.9	TMT	Data centers	7.9
Tracy Hills TL 2025	USD	Private	Senior	45.1	Other	Residential infra	9.6
Scandlines Mezzanine 2032	EUR	Private	HoldCo	44.7	Transport	Ferries	5.9
Euroports 2nd Lien 2026	EUR	Private	Mezz	42.9	Transport	Port	7.8
Bannister Senior Secured	GBP	Private	Senior	41.3	Accomm.	Health care	8.4
Corral HoldCo 2024	USD	Private	HoldCo	39.2	Other	Refinery	10.9
Whittle Schools B	USD	Private	Senior	39.0	Other	Private schools	10.8
Bizkaia TL 2021	EUR	Private	HoldCo	38.3	Power	Elec. generation	7.7
Adani Abbot HoldCo 2021	AUD	Private	HoldCo	38.1	Transport	Port	9.8
Warnow Tunnel	EUR	Private	Senior	36.6	Transport	Road	6.6
EIF Van Hook TL B 2024	USD	Private	Senior	36.3	Utility	Midstream	7.9
Aquaventure Senior Secured	USD	Private	Senior	35.3	Utility	Water	7.4

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

For further information please contact:

Sequoia Investment Management Company  [phone]

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Greg Taylor

Anurag Gupta

Jefferies International Limited      [phone]

Gary Gould

Stuart Klein

Tulchan Communications (Financial PR)  [phone]

Martin Pengelley

Elizabeth Snow

Deborah Roney

Praxis Fund Services Limited (Company Secretary)                  [phone]

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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