Net Asset Value(s)

RNS Number : 3411W

Sequoia Economic Infra Inc Fd Ld

14 November 2017

 

14 November 2017

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 31 October 2017 and Investment Update

Ordinary Share update

SEQI's NAV decreased to 100.75p (ex-dividend) per share from 101.24p (cum dividend) per share on 31 October 2017 which arose primarily through:

·      Interest income net of expenses of 0.53p;

·      An increase of 0.50p in asset valuations;

·      A decrease of 0.03p from FX movements; and

·      A dividend payable of 1.50p.

During October, the Company's investment activities resulted in the total invested portfolio of 86.1% of the Company's NAV, with an additional £78.9m either traded but not settled or undrawn commitments. The total amount invested and committed represents 96.6% 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 24 subsectors, and are collectively valued at £655.8m (incl. accrued interest). The annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) was 7.8% and the acquired portfolio had a weighted average life of approximately 4.7 years. Private debt investments represented 71% of the Company's investments. The weighted average purchase price of the Company's acquired investments was c.94.9% of par. Investments which are pre-operational represent 15.8% of total assets.

 As of the 31st October 2017, approximately 92% 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 54% of the invested portfolio comprises floating rate assets, with only two LIBOR floors 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 October include:

·      A $21.7m direct origination to Sunrun, a residential solar portfolio; and

·      An incremental £5.6m strip of bonds for Theatre (Hospitals) plc, which finances operating hospitals in the UK.

Additionally, the Company sold its $19.3m position of Longview Power and the £38.0m investment in AP Wireless repaid in full on its maturity date.

Ordinary Portfolio Summary (15 largest settled investments)

Transaction name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
Hawaiki Mezzanine Loan	USD	Private	Mezz	38.7	TMT	Undersea cable	11.2
A'lienor S.A.S. (A65)	EUR	Private	Senior	37.8	Transport	Road	3.1
IO Data Centers	USD	Private	Senior	37.7	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	26.4	TMT	Data centers	8.0
Warnow Tunnel	EUR	Private	Senior	21.0	Transport	Road	6.8
Natgasoline	USD	Private	Mezz	20.8	Other	Industrial infra	10.0
Exeltium Mezzanine	EUR	Private	Mezz	20.5	Power	PPA	12.4
Welcome Break No.1 Ltd	GBP	Private	Mezz	18.3	Transport	Motorway services	8.4
Terra-Gen Power TL B	USD	Private	Senior	17.1	Renewables	Solar & Wind	8.0
NGG Finance 5.625% 2073	GBP	Public	Mezz	17.1	Utility	Electricity Distribution	3.5
Neoen Production	EUR	Private	HoldCo	16.6	Renewables	Solar & wind	7.0
Tracy Hills TL 2025	USD	Private	Senior	15.7	Other	Residential Infra.	9.3
Global Ship Lease 10% 2019	USD	Public	Senior	14.5	Transport Assets	Shipping	5.0

Note (1) - excluding accrued interest

Market Summary

A total of 23 project finance transactions closed in October throughout the Company's eligible jurisdictions, and were worth $5.6b in aggregate. Notable transactions during the month include:

·      The €83m additional financing of the 27.5MW Slievecallan East and 47MW Ballyhoura onshore wind farms in Ireland;  

·      The $208m private placement bond refinancing of the Windsor Essex Parkway project in Ontario, Canada; and

·      The $200 mezzanine debt investment by AMP Capital into Vertical Bridge, the largest private US telecommunications tower infrastructure owner.

In October, estimates of third quarter United States economic growth were at 3%, above the projected 2.5%. The US economy added 261,000 jobs, reducing the unemployment rate to 4.1%. Jerome Powell has been nominated as the new Federal Reserve chairman, but is not anticipated to change the central bank's policies, with an interest raise rise in December still expected.

The eurozone economy has continued to grow, with a 0.6% GDP growth during Q3, giving an annualized growth rate of 2.5%.  During October, the Euro weakened and the US Dollar strengthened against Sterling ending the month at €1.1405 and $1.3283 respectively, and the Bloomberg USD High Yield Corporate Bond Index rose slightly to 183.2.

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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