Net Asset Value(s)

RNS Number : 4626T

Sequoia Economic Infra Inc Fd Ld

13 October 2017

 

13 October 2017

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 29 September 2017 and Investment Update

Ordinary Share update

SEQI's NAV increased to 101.24p per share from 100.81p per share on 31st August 2017 which arose primarily through:

·      Interest income net of expenses of 0.47p;

·      An increase of 0.45p in asset valuations;

·      A decrease of 0.49p from FX movements.

During September, the Company's investment activities resulted in the total invested portfolio of 88.5% of the Company's NAV, with an additional £52.5m either traded but not settled or undrawn commitments. The total amount invested and committed represents 95.4% of the Company's NAV. The Company had gross leverage of £40m representing c.5.3% of NAV.

The portfolio held 33 private debt investments and 20 infrastructure bonds for a total of 53 investments that covered 8 sectors and 25 subsectors, and are collectively valued at £677.7m (incl. accrued interest). The annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) was 8.1% and the acquired portfolio had a weighted average life of approximately 4.5 years. Private debt investments represented 73% of the Company's investments. The weighted average purchase price of the Company's acquired investments was c.95.0% of par. Investments which are pre-operational represent 15.8% of NAV.

As of the 29th September 2017, approximately 90% of NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate resources to cover the cash costs associated with its hedging activities. Each of its FX hedge providers has credit lines to the Company which means that the margin calls on the hedge portfolio have historically been modest.

Approximately 57% of the invested portfolio comprises floating rate assets, with only two LIBOR floor above current LIBOR levels (EUR). As such, the portfolio's yield is likely to rise over time as LIBOR increases.

The Company's settled investment activities during September include:

·      A €40m secondary purchase of a loan strip for Warnow Tunnel, a toll road that crosses the Warnow River in Rostock, Germany;

·      A £32m strip of bonds for Theatre (Hospitals) plc, which finances operating hospitals in the UK;

·      The final drawdown of $20m to Hawaiki, a company that lays broadband cable across the Pacific Ocean to connect Australia, Hawaii, and the US;

·      The first drawdown of $20.9m to Tracy Hills, a residential infrastructure project in California;

·      A $25m secondary market purchase of a loan to Terra-Gen, a southern California renewables company that produces 653MW of renewable energy.

The Company had an ongoing charge ratio of 0.96% p.a. for the quarter ended 30 June 2017 (of which 0.62% p.a. pertained to the Investment Adviser's fee).

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	38.2	Transport	Road	3.5
AP Wireless Infrastructure	GBP	Private	Senior	38.0	TMT	Towers	6.0
Hawaiki Mezzanine Loan	USD	Private	Mezz	38.0	TMT	Undersea cable	11.2
IO Data Centers	USD	Private	Senior	37.3	TMT	Data centers	9.0
Cory Environmental	GBP	Private	HoldCo	32.7	Utility	Waste-to-energy	8.5
Regard Group Mezzanine	GBP	Private	Mezz	29.0	Accommodation	Health care	12.1
Abteen Ventures	USD	Private	Senior	26.1	TMT	Data centers	8.0
Warnow Tunnel	EUR	Private	Senior	21.1	Transport	Road	6.8
Exeltium Mezzanine	EUR	Private	Mezz	20.6	Power	PPA	12.4
Natgasoline	USD	Private	Mezz	20.6	Other	Industrial infra	10.0
Welcome Break No.1 Ltd	GBP	Private	Mezz	18.3	Transport	Motorway services	8.3
NGG Finance 5.625% 2073	GBP	Public	Mezz	17.0	Utility	Electricity Distribution	3.5
Terra-Gen Power TL B	USD	Private	Senior	17.0	Renewables	Solar & Wind	8.1
Neoen Production	EUR	Private	HoldCo	16.6	Renewables	Solar & wind	7.0
Tracy Hills TL 2025	USD	Private	Senior	15.6	Other	Residential Infra.	9.3

Note (1) - excluding accrued interest

Market Summary

A total of 44 project finance transactions closed in September throughout the Company's eligible jurisdictions, and were worth $10.7b in aggregate. Notable transactions during the month include:

·      The £207m primary financing of the second phase of the Ferrybridge Multifuel 2 EfW plant. The plant is under construction and is intended to process up to 675 thousand tonnes of waste each year upon operations;

·      The $179.4m refinancing of the Mesquite gas-fired generation station in Arizona;

·      The $438 million investment-grade refinancing of the Tenaska solar project in Imperial Valley, California.

In September, the Federal Reserve announced it intended to unwind some of the stimulus it had put into place after the 2008 financial crisis. It will begin to cut its balance sheet in October and is expected to raise interest rates once more in 2017, with three rate hikes expected in 2018.

The eurozone economy has continued to grow, with the ECB raising its growth forecast to 2.2%, the highest seen since 2007.

During September, both the Euro and the US Dollar weakened against Sterling ending the month at €1.1348 and $1.3395 respectively, and the Bloomberg USD High Yield Corporate Bond Index rose slightly to 182.3.

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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