NAV and Investment Update

RNS Number : 9770B

Sequoia Economic Infra Inc Fd Ld

14 October 2020

 

14 October 2020

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 100.17 pence per share from the prior month's NAV of 98.98 pence per share, representing an increase of 1.19 pence per share.

The gain in asset valuations can be attributed primarily to the material market value increase of a €61.2m transport position after the Borrower initiated a refinancing process to repay the debt at par. The position was previously marked at a significant discount to par and the refinancing is expected to close before year end.

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

	pence per share
August NAV	98.98
Interest income, net of expenses	0.70
FX movements, net of hedges	0.02
Increase in asset valuations	0.47
September NAV	100.17

Update on the effects of COVID-19 on the Portfolio

The Investment Adviser, the Investment Manager, and PWC, the independent valuation agent, have continued their close analysis of the effects of COVID-19 on the Company's portfolio which also includes a market benchmarking exercise to conclude on spread and yield adjustments for each of the investments.

In summary, the spread widening across the portfolio during the second half of March 2020 continued its reversal throughout August and remained flat throughout September, with several of the Company's investments performing better than expectations throughout the lockdown. The Investment Adviser is also closely watching the Company's assets that have not been performing as expected during the pandemic to ensure that current market conditions are managed adequately.

Further Portfolio update

As at 30 September 2020, the Company had cash of £82.6m and had drawn £80.5m on its £280m Revolving Credit Facility. The Company also had undrawn commitments on existing investments collectively valued at £18.3m. As of 30 September 2020, the Company's invested portfolio comprised of 61 private debt investments and 13 infrastructure bonds across 8 sectors and 28 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 10.2% and a weighted average life of approximately 5.6 years. Private debt investments represented 93% of the total portfolio and 63% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 96.5% of par. Investments which are pre-operational represented 11.6% of total assets.

The Company's invested portfolio remains geographically diverse with 51% located across the US, 15% in the UK, 28% 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 98% 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 Company's settled investment activities during September include:

· A primary purchase of $25m Navigator Holdings' 8% 2025 bonds, a leading player within the transportation of liquified gases;

· An additional €20.0m holdco disbursement to Kenai Capital Markets, a German logistics and industrial park owner, under its existing facility agreement;

· An additional $1.8m disbursement to Bourzou Equity, a company created for a data centre in Virginia; and

· An additional $7.0m disbursement to Salt Creek, a midstream company located in the Permian Basin in Texas, USA.

The following Company's investments were sold or prepaid in September:

· Nottingham Student Housing's £16.5m construction loan, which was backed by a 229-unit purpose-built student accommodation development in Nottingham, UK repaid at 102.5% of par.

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	62.6	TMT	Telecom towers	6.2
Hawaiki Mezzanine Loan	USD	Private	Mezz	52.4	TMT	Undersea cable	13.0
Warnow Tunnel	EUR	Private	Senior	50.1	Transport	Road	4.3
Expedient Data Centers Senior Secured	USD	Private	Senior	49.7	TMT	Data centers	5.8
Terra-Gen Power TL B	USD	Private	Senior	45.3	Renewables	Solar & wind	6.1
Scandlines Mezzanine 2032	EUR	Private	HoldCo	44.6	Transport	Ferries	7.4
Euroports 2nd Lien 2026	EUR	Private	Mezz	44.5	Transport	Port	8.6
Hawkeye Solar HoldCo 2030 1, 2, and 3	USD	Private	HoldCo	42.5	Renewables	Solar & wind	8.2
Bannister Senior Secured	GBP	Private	Senior	41.6	Accomm.	Health care	7.1
Bizkaia TL 2021	EUR	Private	HoldCo	41.6	Power	Elec. generation	8.6
Tracy Hills TL 2025	USD	Private	Senior	41.5	Other	Residential infra	8.3
Jetpeaks HoldCo 2027	USD	Private	HoldCo	41.3	Power	Elec. generation	7.8
Adani Abbot HoldCo 2021	AUD	Private	HoldCo	40.4	Transport	Port	16.4
Kenai HoldCo 2024	EUR	Private	HoldCo	39.8	Power	Elec. generation	11.5
GenOn Bowline Senior Secured 2026	USD	Private	Senior	38.7	Power	Elec. generation	8.0

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]

Gaudi le Roux

Neil Winward

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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