NAV and Investment Update

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 Dividend declared for quarter ending 30 June 2021 Adjusted opening NAV	103.13 -1.56 101.57
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 £100.1m and had drawn £83.8m on its £280m Revolving Credit Facility. The Company also had undrawn commitments on existing investments collectively valued at £128.8m. 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 £2.7m loan to Lloyds Development Limited, a hotel development in Glasgow; and

· A €28.4m takeout financing to Ventus, a German real estate developer specializing in social infrastructure in Germany.

The following assets sold or prepaid in July:

· A €16.4m 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 £m (1)	Sector	Sub-sector	Cash-on-cash yield (%)	Yield to maturity / worst (%)
Madrid Metro	EUR	Private	HoldCo	66.4	Transport assets	Rolling stock	1.30	5.40
Infinis Energy	GBP	Private	Senior	65.0	Renewables	Landfill gas	5.00	5.00
AP Wireless Junior	EUR	Private	Mezz	60.5	TMT	Telecom towers	4.22	6.12
Bannister Senior Secured	GBP	Private	Senior	55.8	Accomm.	Health care	6.54	6.54
Bulb Senior TL	GBP	Private	Senior	54.7	Utility	Electricity supply	6.59	7.02
Hawkeye Solar HoldCo	USD	Private	HoldCo	54.3	Renewables	Solar & wind	8.04	7.84
Hawaiki Mezzanine Loan	USD	Private	Mezz	54.1	TMT	Undersea cable	8.45	9.50
Tracy Hills TL 2025	USD	Private	Senior	53.0	Other	Residential infra	8.09	8.09
AP Wireless US Holdco	USD	Private	HoldCo	49.8	TMT	Telecom 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 Secured	EUR	Private	Senior	43.2	Accomm.	Health 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  [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

Laura Marshall

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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