Net Asset Value(s)

RNS Number : 8282N

Sequoia Economic Infra Inc Fd Ld

14 August 2017

 

14 August 2017

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 31 July 2017 and Investment Update

Ordinary Share update

SEQI's NAV decreased to 100.11 per share from 101.34 per share on 30th June 2017 which arose primarily through:

·      Interest income net of expenses of 0.40p;

·      A decrease of 0.11p in asset valuations;

·      A decrease of 0.02p from FX movements;

·      A dividend declaration of 1.50p.

During July, the Company had invested approximately £32m, resulting in the total invested portfolio of 79.7% of the Company's NAV, with an additional £80.2m either traded but not settled or undrawn commitments. The total amount invested and committed represents 90.5% of the Company's NAV. The Company had gross leverage of £40m representing approximately 5.3% of NAV.

The portfolio held 30 private debt investments and 17 infrastructure bonds for a total of 47 investments that covered 8 sectors and 25 subsectors, and are collectively valued at £603.2m including accrued interest with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 7.9% and a weighted average life across the acquired portfolio of approximately 4.6 years. The weighted average purchase price of the Company's acquired investments was approximately 96.8% of par.  Investments with construction risk represent 14% of NAV.

As of the 31st July 2017, approximately 88% 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 been modest.

Approximately 47% 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 expects the floating rate proportion to exceed 50% once the proceeds of the recent equity issue are deployed.

The Company's investment activities during July include:

·                  First drawdown of $30m to Hawaiki, a company that lays broadband cable across the Pacific Ocean to connect Australia, Hawaii, and the US; 

·                  An additional £5m investment to the Regard Group, which manages a care home portfolio;

·                  An additional £5m investment in AP Wireless, a leading mobile mast site lease investment firm;

·                  An incremental $5m of Global Ship Lease 10% 2019 bonds;

·                  A scheduled £1m drawdown was made to Clyde Street, the Glasgow student housing transaction.

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	38.8	Transport	Road	3.37
AP Wireless Infrastructure	GBP	Private	Senior	38.0	TMT	Towers	6.31
IO Data Centers	USD	Private	Senior	37.9	TMT	Data centers	9.00
Cory Environmental	GBP	Private	HoldCo	32.7	Utility	Waste-to-energy	8.50
Regard Group Mezzanine	GBP	Private	Mezz	28.6	Accommodation	Health care	12.05
Abteen Ventures	USD	Private	Senior	26.5	TMT	Data centers	8.00
Hawaiki Mezzanine Loan	USD	Private	Mezz	22.7	TMT	Undersea cable	11.23
Exeltium Mezzanine	EUR	Private	Mezz	20.9	Power	PPA	12.39
Natgasoline	USD	Private	Mezz	19.9	Other	Industrial infra	9.99
Welcome Break No.1 Ltd	GBP	Private	Mezz	18.3	Transport	Motorway services	8.29
NGG Finance 5.625% 2073	GBP	Public	Mezz	17.0	Utility	Electricity Distribution	3.58
Neoen Production	EUR	Private	HoldCo	16.9	Renewables	Solar & wind	7.00
Global Ship Lease 10% 2019	USD	Public	Senior	14.1	Transport assets	Shipping	10.79
Cheniere Corp. Christi	USD	Public	Senior	13.0	Transport	Ports	4.42
NRG Energy Inc 7.25% 2026	USD	Public	Senior	12.8	Power	Electricity Generation	6.21

Note (1) - excluding accrued interest

Market Summary

A total of 21 project finance transactions closed in July throughout the Company's eligible jurisdictions, and were worth, in aggregate, $8.1bn.

Notable transactions include the €861m debt refinancing of Scandlines, a German-Danish ferry company that operates short-distance routes, as well as the $530m financing of the 200MW Flat Top wind farm in Texas, of which $309m consisted of debt.

The Federal Reserve kept rates steady in July on the back of conflicting data reflecting low unemployment but also weaker than expected inflation. Janet Yellen suggested that the quantitative easing programme could begin to unwind as soon as the next meeting.

The Eurozone had an active month with the Euro trading at a two-year high against the Dollar, and spreads tightening between Bunds and the debt of periphery countries. Similar to the US, headline inflation in the Eurozone was still below target which the ECB used as evidence to support its dovish views.

During July, Sterling fell against the Euro and continued to strengthen against the Dollar, ending the month at €1.1168 and $1.3190 respectively, and the Bloomberg USD High Yield Corporate Bond Index rose slightly to 180.4.

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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