Net Asset Value(s)

RNS Number : 1706U

Sequoia Economic Infra Inc Fd Ld

16 January 2017

 

16 January 2017

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 30 December 2016 and Investment Update

Ordinary Share update

As of the 30th December 2016, the Company held 26 private debt investments and 14 infrastructure bonds for a total of 40 investments across 8 sectors and 21 subsectors, which are collectively valued at £475.0m including accrued interest, with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.0% and a weighted average life across the acquired portfolio of approximately 4.7 years.  The Ordinary Share NAV is 102.48p.

Approximately 44% of the portfolio comprises floating rate assets, with only two LIBOR floors above current LIBOR levels (of which one is Sterling and the other is Euros). As such, the portfolio's yield is likely to rise over time as LIBOR increases.

The investments are across the UK, Western Europe, Australia, Canada and the US and include a wide range of asset types including road, rail, utility, power, shipping, renewables and aircraft and ship leasing.

In the beginning of December, the Company remained fully invested until the 9th December 2016 when the additional 120m Ordinary Shares were issued, raising gross proceeds of £126m.

In the second half of December, the Company's investment activities include:

·       An investment in Talen Energy Supply's bonds maturing in 2025;

·       VanGansewinkel Groep, a Dutch waste management company loan; and

·       The final drawdowns of Abteen Ventures LLC which now represents the portfolio's third largest position valued at 28.4m.

In addition, two of the Company's investments prepaid in the second half of December: Mount Signal Solar and Infinis Bridge Loan. Both of these prepayments were in line with the Investment Adviser's expectations.

As of the 30th of December, the Company's leverage is modest at 6.6% of NAV, and the Company remains confident in its ability to deploy the proceeds of the equity raise into its attractive pipeline of opportunities.

Sterling fell slightly against both the Dollar and the Euro during the month of December; however the Investment Adviser remains committed to reducing NAV volatility arising from FX movements by maintaining its hedging strategy. As of the 30th December 2016, approximately 78% of NAV was either Sterling assets or hedged into Sterling, which is a slight decrease from 82% one month prior.

The Company has more than adequate resources to cover the cash costs associated with its hedging book. Each of its FX hedge providers has credit lines to the Company which means that the margin calls on the hedge portfolio have been modest.

The increase in the Ordinary Share NAV to 102.48p per share arose primarily through:

·       Interest income net of expenses of 0.37p;

·       An increase of 0.22p in asset valuations;

·       An increase of 0.06p in FX movements; and

·       A gain of approximately 0.4p caused by the difference between placing price (net of costs and expenses) and the NAV at the time of the recent placing of new Ordinary Shares in the Company.

Ordinary Portfolio Summary (15 largest settled investments)

Transaction name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
A'lienor S.A.S. (A65)	EUR	Private	Senior	37.3	Transport	Road	3.39
IO Data Centers LLC	USD	Private	Senior	30.4	TMT	Data Centers	9.00
AP Wireless Infrastructure	GBP	Private	Senior	30.0	TMT	Towers	6.39
Abteen Ventures	USD	Private	Senior	28.4	TMT	Data Centers	8.00
Regard Group Mezzanine	GBP	Private	Mezz	22.9	Accommodation	Health Care	12.12
Natgasoline Senior Unsecured	USD	Private	Mezz	20.3	Other	Industrial Infrastructure	9.78
Exeltium Mezzanine	EUR	Private	Mezz	19.0	Power	PPA	9.14
Danaos Snr Secured 2018	USD	Private	Senior	17.8	Transport assets	Shipping	16.78
Neoen Production	EUR	Private	HoldCo	16.1	Renewables	Solar & Wind	6.99
Longview Power TL B	USD	Private	Senior	13.8	Power	Electricity Generation	10.59
GFL 9.875% 2021	USD	Public	Senior	13.4	Utility	Waste	4.79
VanGansewinkel Groep	EUR	Private	Senior	12.8	Utility	Waste	8.58
Talen Energy Supply 4.6% 2021	USD	Public	Senior	12.5	Power	Electricity Generation	10.31
Green Plains TL B	USD	Private	Senior	11.5	Other	Alternative Fuel	6.62
Heathrow 5.75% 2025	GBP	Public	Senior	11.4	Transport	Airport	2.47

Note (1) - excluding accrued interest

Market Summary

December was an active month in the infrastructure debt sector in terms of both the size and number of deals that reached financial close.

According to Infrastructure Journal, 25 transactions reached financial close throughout Europe and North America in December totalling nearly $6bn in debt financing.

One notable deal was 100% debt financing of the 1.5GW Lackawanna CCGT Power Plant in Pennsylvania which totalled roughly $1bn. A 370MW offshore wind farm in Belgium also received financing of €1.2bn, of which 70% is debt.

In December, oil prices surged to their highest levels since July 2015 at roughly $57 a barrel, directly resulting from a Russian-led oil producer coalition.

December news flow also covered the US Federal Reserve's decision to raise short-term interest rates in response to the strengthening US economy.

In Europe, Mario Draghi at the ECB confirmed that the QE program will be extended by nine months which was followed by clear upward movements in sovereign bond yields.

During December, Sterling fell slightly against both the Dollar and Euro, ending the month at $1.23 and €1.17 respectively. The Bloomberg USD High Yield Corporate Bond Index rose to 169.

The Company's monthly investor report and additional portfolio disclosure will be made available at http://www.seqifund.com/.

Sequoia Investment Management Company

Randall Sandstrom / Steve Cook                                     Telephone [phone]

Stifel Nicolaus Europe Limited

Neil Winward / Mark Bloomfield / Gaudi Le Roux              Telephone [phone]

International Fund Management Limited

Chris Hickling                                                                Telephone [phone]

About Sequoia Economic Infrastructure Income Fund Limited

The Company is a Guernsey registered closed-ended investment company that 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.  The Company has been advised that the Shares can be considered as "excluded securities" for the purposes of the FCA rules regarding the definition and promotion of Non-Mainstream Pooled Investments (NMPIs).

 

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