Net Asset Value(s)

RNS Number : 7421A

Sequoia Economic Infra Inc Fd Ld

14 September 2018

 

14 September 2018

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 31 August 2018 and Investment Update

Ordinary Share update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 101.17p from the prior month's NAV of 100.46p per share. The changes in NAV arose primarily through:

·      Interest income net of expenses of 0.66p;

·      An increase of 0.04p in asset valuations;

·      An increase of 0.01p from FX movements.

On 09 August 2018, the Company resolved to exercise the £50 million accordion tranche of its existing multi-currency Revolving Credit Facility. The RCF and the accordion will continue to be used to fund the Company's strong, diversified pipeline of economic infrastructure debt investments and for working capital purposes.

During the month, the Company drew a total of £16.0m from the accordion, resulting in gross leverage of £116.0m as at 31 August. The Company's total net assets after deducting net borrowings were therefore £831.4m at month end. The Company also had undrawn commitments and two additional investments in the process of settlement, collectively valued at £150.1m.

The Company's invested portfolio comprised of 40 private debt investments and 18 infrastructure bonds collectively valued at £888.7m (including accrued interest). The investments were diversified across 8 sectors and 24 sub-sectors and had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.6% and a weighted average life of approximately 5.0 years. Private debt investments represented 85.2% of the total portfolio and 64.2% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was c.97.0% of par. Investments which are pre-operational represented 11.8% of total assets.

The Company's invested portfolio remains geographically diverse with 42% located across the US, 17% in the UK, 29% in Europe, and 12% in Australia/New Zealand. Currently the Company is not investing in Italy but has invested in selective opportunities in Spain.

As at 31 August 2018, the Company's NAV consisted entirely of either Sterling assets or was hedged into Sterling. The Company has adequate resources to cover the cash costs associated with its hedging activities.

The Company's settled investment activities during August include:

·     A €20.0m primary loan to Mainsite Logistik Holding, a logistics service provider to market leading industrial companies in Germany;

·     A $10.0m primary loan to Midcoast Energy, a natural gas liquids pipeline in Texas;

·     An initial disbursement of $4.0m to Whittle Schools for the development of a private school in Washington D.C;

·     An additional disbursement of €2.4m to Native Dancer, a student accommodation building in Leiden, The Netherlands; and

·     An additional secondary purchase of NOK 8.0m Exmar 9.02% 2019 bonds.

The investments that prepaid or were sold during August include:

·      The expected £26.9m prepayment of the Bulb Energy Term Loan; and

·      The expected $9.1m refinancing of the Invenergy Term Loan B.

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
Hawaiki Mezzanine Loan	USD	Private	Mezz	54.9	TMT	Undersea cable	10.2
Salt Creek Midstream	USD	Private	Senior	50.2	Utility	Midstream	6.8
Tracy Hills TL 2025	USD	Private	Senior	46.3	Other	Residential Infra	10.3
Scandlines Mezzanine 2032	EUR	Private	HoldCo	44.7	Transport	Ferries	6.7
Adani Abbot Holdco 2021	AUD	Private	HoldCo	41.6	Transport	Port	6.8
Bizkaia TL 2021	EUR	Private	HoldCo	35.8	Power	Elec. Generation	7.7
Sunrun Hera 2017-B	USD	Private	Mezz	30.9	Renewables	Solar & Wind	7.3
Cory Environmental	GBP	Private	HoldCo	30.6	Utility	Waste-to-energy	8.5
Aquaventure	USD	Private	Senior	27.0	Utility	Water	8.3
Abteen Ventures	USD	Private	Senior	26.9	TMT	Data Centers	7.6
Warnow Tunnel	EUR	Private	Senior	25.4	Transport	Road	6.9
Terra-Gen Power TL B	USD	Private	Senior	23.7	Renewable	Solar & Wind	10.4
Panda Patriot	USD	Private	Senior	22.4	Power	Elec. Generation	8.6
Clyde Street Glasgow	GBP	Private	Senior	21.5	Accomm.	Student Housing	8.2
Project Warsaw 2	EUR	Private	Senior	19.5	Renewables	Solar & Wind	5.9

Note (1) - excluding accrued interest

Market Summary

A total of 41 project finance transactions closed in August throughout the Company's eligible jurisdictions, worth $10.1bn in aggregate. Notable transactions during the month include:

·      A $650m financing of the development of the South Field Energy Gas-Fired Power Plant in Ohio, USA;

·      A $1.250bn financing of the acquisition of a 50% stake in the 900MW Triton Knoll Offshore Wind Farm off the coast of England; and

·      A CAD $4,300m financing of the acquisition of the Canadian energy solutions company Enercare.

The US economy added 201,000 jobs in August while the unemployment rate remained steady at 3.9%. The economy grew at an annualized pace of 4.2% in Q2 2018, nearly doubling the 2.2% rate seen in Q1.

Eurozone economic growth has been revised up to 0.4% for Q2 2018, for an annualized rate of 1.5%, and is expected to grow only moderately in Q3 2018.

The UK economy is projected to maintain its 0.4% growth rate for Q3 2018, with continued uncertainty about Brexit.

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

LEI: 2138006OW12FQHJ6PX91

For further information please contact:

Sequoia Investment Management Company                           [phone]

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Greg Taylor

Stifel Nicolaus Europe Limited                                                [phone]

Neil Winward

Mark Bloomfield

Gaudi Le Roux

Tulchan Communications (Financial PR)                                 [phone]

James Macey White

Martin Pengelley

Elizabeth Snow 

Praxis Fund Services Limited (Company Secretary)               [phone]

Matt Falla                                                                     

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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