NAV and Investment Update

RNS Number : 8694C

Sequoia Economic Infra Inc Fd Ld

14 October 2022

 

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

14^th Oct 2022

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Director / PDMR Dealing

In September, the Directors of SEQI acquired 111,500 SEQI shares in total in the personal capacity.

NAV update

The NAV for SEQI, the specialist investor in economic infrastructure debt, decreased to 93.64 pence per share from the prior month's NAV of 96.74, representing a decrease of 3.10 pence per share.

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

	pence per share
August NAV	96.74
Interest income, net of expenses	1.08
Asset valuations	-4.22
FX movements, net of hedges	0.00
Subscriptions	0.04
September NAV	93.64

Portfolio update

As at 30 September, the Company had cash of £38.2m and had drawn 193.0m on its £325m revolving credit facility. The Company also had undrawn commitments on existing investments collectively valued at £89.8m. The Company's invested portfolio consisted of 64 private debt investments and 8 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 11.2% and a cash yield of 7.3%. The weighted average portfolio life is approximately 4.5 years. Private debt investments represented 96% of the total portfolio and 57% of the portfolio comprised floating rate assets.

The Company's invested portfolio remains geographically diverse with 55% located across the US, 21% in the UK, 23% in Europe, and 1% in Australia/New Zealand. 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 fall in the NAV this month is primarily due to increases in risk-free rates and credit spreads. The rise in risk-free rate adjustments has also increased the yield-to-maturity of floating rate investments and reduced the clean price of fixed rate assets (which also increases the yield-to-maturity). Investors are reminded that these declines are unrealised mark-to-market adjustments that should reverse over time as the investments approach their repayment date (the "pull-to-par").

The Investment Adviser expects the Company's dividend cover to materially improve for the 2023 financial year as the portfolio's floating rate investments (representing 57% of the portfolio) continue to benefit from increasing short term interest rates.

The following investments settled in September (excluding small loan drawings of less than $0.5m):

• A Senior loan for £50.0m to Workdry, the UK's leading provider of essential and emergency water handling infrastructure solutions;

• An additional loan for £10.0m to Project Spinnaker, a high-speed Broadband provider in the UK; and

• An additional loan for PLN 38.4m (equivalent to £7.0m) to Green Genius to finance the construction of solar PV projects in Poland.

The following assets sold or prepaid in September:

• A partial $20.3m sale of American Shipping Company (AMSC) 2025 bonds, a US-based tanker company;

• A full repayment of €15.0m from Project Swordfish, a company that operates waterbus passenger transport systems in Antwerp, Belgium;

• A partial repayment of £4.0m from the administrators of Simple Energy, the parent of Bulb Energy, an electricity supplier based in the UK; and

• A partial $2.7m sale of Embarq Corporation 2036 bonds, a major telecom operator in the USA.

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

• 4000 Connecticut Avenue (formerly Whittle School): the borrower has continued the execution of its strategy for the property. The value of this loan has remained unchanged this month. Since the Whittle School is no longer a tenant of the property, we have renamed this transaction to reflect its current status as a loan backed by a property.

  Bulb Energy : the Company received a £4 million distribution this month from Simple Energy, and the value of this loan has been adjusted to reflect that receipt. In total, the Company has received back £14.0 million so far from Simple Energy. Further distributions are expected as progress is made on the resolution of the Administration.

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 (%)
AP Wireless US Holdco	USD	Private	HoldCo	64.3	TMT	Telecom towers	6.29	9.17
Bannister Senior Secured	GBP	Private	Senior	63.2	Accommodation	Health care	8.40	8.77
Project Tyre	USD	Private	Senior	62.9	Transport assets	Specialist shipping	8.26	8.26
Tracy Hills TL 2025	USD	Private	Senior	61.6	Other	Residential infra	11.12	11.11
GenOn Bowline Senior	USD	Private	Senior	59.0	Power	Energy transition	9.30	9.29
Hawkeye Solar HoldCo	USD	Private	HoldCo	58.9	Renewables	Solar & wind	9.12	10.08
Brightline	USD	Private	Senior	57.6	Transport	Rail	8.73	10.08
Montreux HoldCo Facility	GBP	Private	HoldCo	57.4	Accommodation	Health care	12.21	12.41
AP Wireless Junior	EUR	Private	Mezz	56.4	TMT	Telecom towers	7.00	8.52
Expedient Data Centers	USD	Private	Senior	56.1	TMT	Data centers	9.35	10.14
EIF Van Hook TL B 2024	USD	Private	Senior	55.2	Utility	Midstream	8.70	10.23
Madrid Metro	EUR	Private	HoldCo	51.8	Transport assets	Rolling stock	1.43	7.84
Infinis Energy	GBP	Private	Senior	51.2	Renewables	Landfill gas	6.35	8.33
Sacramento Data Centre	USD	Private	Senior	50.2	TMT	Data centers	7.60	8.83
Workdry	GBP	Private	Senior	50.0	Utility	Utility services	5.19	5.19

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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