NAV and Investment Update

Sequoia Economic Infra Inc Fd Ld

17 May 2023

 

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

17^th May 2023

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

NAV update

The NAV per share for SEQI, the specialist investor in economic infrastructure debt, increased by 1.52 pence per share from the prior month's adjusted NAV per share of 91.54 pence, (being the 31 March 2023 cum-income NAV of 93.26 less the dividend of 1.71875 pence per share declared in respect of the quarter ended 31 March 2023 and paid in May 2023). A full attribution of the changes in the NAV per share is as follows:

	pence per share
March NAV	93.26
Interest income, net of expenses	0.61
Asset valuations, net of FX movements	0.85
Subscriptions	0.06
Dividends	-1.72
April NAV	93.06

As the Company is approximately 100% currency hedged, it does not expect to realise any material FX gains or losses over the life of its investments. However, the Company's NAV may include unrealised short-term FX gains or losses, driven by differences in the valuation methodologies of its FX hedges and the underlying investments - such movements will typically reverse over time.

Capital Markets Day - 10 May 2023

The Investment Adviser held a Capital Markets Day for institutional investors and analysts on Wednesday 10th May 2023 at the London Stock Exchange. The aim of the event was to provide investors with an insight to international infrastructure and credit investment themes and an update on the positioning of SEQI against the current market backdrop.

Those interested in watching the SEQI's Capital Markets Day can view a recording on the SEQI website (https://www.seqi.fund/media). The SEQI website has been updated recently and contains extra background information on the Fund and its loans that investors may find of interest.  

Dividends and share buyback

The Directors of the Company have declared that an interim dividend of 1.71875p per share will be payable to holders of Ordinary Shares as follows in respect of the three-month period ended 31 March 2023. The payment date for the dividend will be 26 May 2023.

During April 2023 the Company purchased 9,549,646 of its ordinary shares in the market at an average purchase price of 82.53 pence per share. Following this, the Company holds 42,969,091 ordinary shares in Treasury following the commencement of a share buyback programme in July 2022. The Board and the Investment Adviser remain confident in the Company's NAV, including uplifts over time expected from the pull-to-par effect (see below).

Portfolio update

As at 28 April 2023, the Company had cash of £100.9m and had drawn £179.9m on its £325.0m revolving credit facility with the remaining balance available to support the Company's working capital and liquidity requirements. The Company also had undrawn commitments on existing investments collectively valued at £86.5m.

The Company's invested portfolio consisted of 62 private debt investments and 7 infrastructure bonds across 8 sectors and 26 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 11.75% and a cash yield of 7.40%. The yield-to-maturity has been rising, which is mainly attributable to the higher interest rate environment and the Company's exposure to floating rate investments, which comprise 56.91% of the portfolio as of April 2023. The weighted average portfolio life is approximately 3.4 years. Private debt investments represented 97.7% of the total portfolio. The Company's invested portfolio remains geographically diverse with 48.1% located across the US, 25.6% in the UK, 26.2% in Europe, and 0.1% in Australia/New Zealand.

As at April 2023, the pull-to-par is estimated to be worth approximately 6.3p/share over the course of the life of the Company's investments. Investors are reminded that declines in unrealised mark-to-market adjustments should reverse over time as the investments approach their repayment date (the "pull-to-par" effect).

The Company's pipeline of economic infrastructure debt investments remains strong and is diversified by sector, sub-sector, and jurisdiction, with yields ranging from 9% -11%. At month end, approximately 100% of the Company's NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate liquidity to cover margin calls on its hedging book.

The following investments settled in April 2023 (excluding small loan drawings of less than £0.5m):

• An additional purchase of Samhällsbyggnadsbolaget (SBB) 2027 senior corporate bonds for €5.0m. SBB is a social infrastructure property company listed on the Nasdaq Stockholm (Large Cap) and the yield-to-maturity is approximately 10.8%;

• An additional loan for PLN 10.5m (equivalent to £2.0m) to Green Genius to finance the construction of solar PV projects in Poland; and

• An additional senior loan for £1.0m to Clyde Street, a hotel construction project in Scotland.

No investments sold or prepaid in April 2023

Non-performing loans  

There has been ongoing progress over the past month in relation to the Company's two non-performing loans, the marks on which are approximately unchanged this month.

Further updates will be provided to shareholders in the future when developments occur.

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 Junior	EUR	Private	Mezz	58.9	TMT	Telecom towers	4.61	8.03
Bannister Senior Secured 2025	GBP	Private	Senior	58.9	Accommodation	Health care	10.70	12.83
AP Wireless US Holdco	USD	Private	HoldCo	57.7	TMT	Telecom towers	6.20	9.47
Infinis Energy	GBP	Private	Senior	55.6	Renewables	Landfill gas	5.85	7.27
Lightspeed Fibre Group Ltd	GBP	Private	Senior	55.5	TMT	Broadband	6.74	14.90
Project Tyre	USD	Private	Senior	55.0	Transport assets	Specialist shipping	10.43	10.43
Montreux HoldCo Facility	GBP	Private	HoldCo	53.4	Accommodation	Health care	14.20	14.04
Hawkeye Solar HoldCo 2030	USD	Private	HoldCo	52.4	Renewables	Solar & wind	8.90	9.71
Expedient Data Centers Senior	USD	Private	Senior	50.6	TMT	Data centers	10.54	11.01
Workdry	GBP	Private	Senior	50.0	Utility	Utility Services	7.72	7.71
Tracy Hills TL 2025	USD	Private	Senior	49.5	Other	Residential infra	11.48	11.47
Project Spinnaker	GBP	Private	Senior	49.3	TMT	Broadband	9.68	10.01
EIF Van Hook TL B 2024	USD	Private	Senior	47.5	Utility	Midstream	10.20	10.57
Madrid Metro	EUR	Private	HoldCo	46.8	Transport assets	Rolling stock	1.39	7.15
Sacramento Data Centre Senior	USD	Private	Senior	45.6	TMT	Data centers	7.90	8.77

Note (1) - excluding accrued interest

Disclaimer: the dividend increase is a target and not a profit forecast

The Company's monthly investor report and additional portfolio disclosure will be made available at https://www.seqi.fund/.

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

Stuart Klein

Teneo (Financial PR)                                                                       [phone]

Martin Pengelley

Elizabeth Snow

Sanne Fund Services (Guernsey) Limited                                    [phone]

(Company Secretary)                                                                       

Matt Falla                                                                                             

Lisa Garnham                                                                                     

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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