NAV and Investment Update

RNS Number : 3336Z

Sequoia Economic Infra Inc Fd Ld

14 September 2022

 

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

14^th Sep 2022

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

NAV update

The NAV for SEQI, the specialist investor in economic infrastructure debt, decreased to 96.74 pence per share from the prior month's NAV of 97.21, representing a decrease of 0.47 pence per share.

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

	pence per share
July NAV	97.21
Interest income, net of expenses	0.79
Asset valuations, consisting of:	-1.36
Bulb, Salt Lake Potash and Whittle School	-0.55
Any other price changes (aggregated)	-0.81
FX movements, net of hedges	0.10
August NAV	96.74

Portfolio update

As at 31 August, the Company had cash of £141.4m and had drawn 234.1m on its £325m revolving credit facility. The Company also had undrawn commitments on existing investments collectively valued at £124.6m. The Company's invested portfolio consisted of 64 private debt investments and 8 infrastructure bonds across 8 sectors and 27 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 10.2% and a cash yield of 7.3%. The weighted average portfolio life is approximately 3.9 years. Private debt investments represented 95% of the total portfolio and 54% of the portfolio

comprised floating rate assets.

The Company's invested portfolio remains geographically diverse with 56% located across the US, 19% in the UK, 24% in Europe, and 1% 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 101% 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 following investments settled in August:

• A Senior loan for $70.0m to finance the acquisition of Project Tyre, a specialist shipping company based in the USA;

• A Senior loan for £32.0m to Project Octopus, a telecom infrastructure services provider based in the UK;

•An additional loan of $17.0m to Paradigm Midstream LLC, a midstream oil & gas company that operates primarily in North Dakota, USA;

• A Senior loan for PLN 50.5m to Green Genius, to finance the construction of solar PV projects in Poland;

• An additional loan of £1.3m to Clyde Street, a hotel construction project in Scotland;

• An advance of $1.1m under the Salt Lake Potash Super Senior Facility, an Australian potash facility in Australia. This is a super-senior liquidity facility to a non-performing asset. The purpose of the loan is to finance the company during the restructuring process;

• An additional loan of $1.0m to Generation Bridge II, an acquisition facility for a non-coal conventional power asset portfolio in the USA; and

• An additional $0.2m disbursement to Lanthanum, a leading developer of hyperscale data centres in Virginia, USA.

The following assets sold or prepaid in August:

• A loan for $50.0m to Exmar Netherlands BV, a specialist shipping company based in Antwerp, Belgium; and

• A full sale of Navigator bonds for $20.3m, a specialist shipping company based in the USA.

There has been significant progress over the past month in relation to the Company's non-performing loans:

• Salt Lake Potash: the process to sell the business has reached a conclusion, subject to customary condition precedents to closing. This will result in the Company exiting its positions apart from a small residual interest in a super senior guarantee facility (as noted above). The recovery on our loans in the short term will be less than we had anticipated but we expect to receive further recoveries over time through a profit-sharing mechanism agreed with the purchaser. For the time being however on the grounds of prudence we have attached no value to our profit sharing rights. The full effect of the restructuring sale has been reflected in this month's NAV.

• Whittle School: the borrower has continued the execution of its strategy for the property. The value of this loan has been written up this month following a successful court process by the borrower to obtain vacant possession of the building. Further information will be provided as matters progress.

  Bulb Energy : the administrators of Simple and Bulb continue to progress the M&A process, and we will be able to update investors once that concludes. Our mark on this loan has remained unchanged this month.

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 (%)
Bannister Senior Secured	GBP	Private	Senior	63.9	Accommodation	Health care	7.79	8.10
AP Wireless US Holdco	USD	Private	HoldCo	63.6	TMT	Telecom towers	6.08	8.10
Project Tyre	USD	Private	Senior	60.2	Transport assets	Specialist shipping	8.26	8.26
Tracy Hills TL 2025	USD	Private	Senior	59.0	Other	Residential infra	10.52	10.52
AP Wireless Junior	EUR	Private	Mezz	58.8	TMT	Telecom towers	6.60	7.32
Hawkeye Solar HoldCo	USD	Private	HoldCo	58.3	Renewables	Solar & wind	8.83	9.47
Montreux HoldCo Facility	GBP	Private	HoldCo	57.4	Accommodation	Health care	11.19	11.18
Infinis Energy	GBP	Private	Senior	56.7	Renewables	Landfill gas	5.74	6.88
GenOn Bowline Senior	USD	Private	Senior	56.5	Power	Energy transition	9.30	9.29
Brightline	USD	Private	Senior	56.4	Transport	Rail	8.55	9.44
Expedient Data Centers	USD	Private	Senior	54.9	TMT	Data centers	7.60	7.95
EIF Van Hook TL B 2024	USD	Private	Senior	54.0	Utility	Midstream	8.05	9.24
Madrid Metro	EUR	Private	HoldCo	52.0	Transport assets	Rolling stock	1.30	7.30
Sacramento Data Centre	USD	Private	Senior	50.6	TMT	Data centers	7.22	7.67
Lightspeed Fibre Group	GBP	Private	Senior	44.5	TMT	Broadband	11.06	12.25

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

Sanne Fund Services Guernsey 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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