Net Asset Value(s)

RNS Number : 5043W

Sequoia Economic Infra Inc Fd Ld

18 April 2023

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES

18^th April 2023

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

NAV update

The NAV per share for SEQI, the specialist investor in economic infrastructure debt, increased to 93.26 per share from the prior month's NAV per share of 93.10 pence per share, representing an increase of 0.16 pence per share. A full attribution of the changes in the NAV per share is as follows:

	pence per share
February NAV	93.10
Interest income, net of expenses	0.74
Asset valuations, FX movements net of hedges	-0.64
Subscriptions/Redemptions	0.06
March NAV	93.26

As the Company is approximately 100% currency hedged, it does not expect to realise any material FX gains or losses over the life of its investments. However, the Company's NAV may include unrealised short-term FX gains or losses, driven by differences in the valuation methodologies of its FX hedges and the underlying investments - such movements will typically reverse over time.

Capital Markets Day - 10 May 2023

The Investment Adviser will be holding a Capital Markets Day for institutional investors and analysts on Wednesday 10th May 2023 at 15:00 BST until 17:00 BST. The aim of the event is to provide investors with an insight to international infrastructure and credit investment themes and an update on the positioning of SEQI against the current market backdrop. There will also be an opportunity for investors to meet members of the SEQI Board and the broader Investment Adviser team.

Those interested in joining SEQI's Capital Markets Day virtually, please register via the following link: ( https://www.lsegissuerservices.com/spark/SequoiaEconomicInfrastructureIncomeFundLtd/events/4b6c6d4e-46a9-4db2-8be9-a445965021dc ). Those interested in attending in-person should email: [e-mail]

Dividends and share buyback

The next expected dividend declaration date will be on 20 April 2023. This will be the second quarterly dividend at the new, higher dividend target, which was increased by 10% in November 2022 to 6.875 pence p.a. At the closing share price of 82.90 on 17 April 2023, the dividend yield on the Company's share price is 8.29%.

During March 2023 the Company purchased 9,440,784 of its ordinary shares in the market at an average purchase price of 81.64 pence per share. Following this, the Company holds 33,419,445 ordinary shares in Treasury following the commencement of a share buyback programme in July 2022. The Board and the Investment Adviser remain confident in the Company's NAV, including uplifts over time expected from the pull-to-par effect (see below).

Portfolio update

As at 31 March 2023, the Company had cash of £68.1m and had drawn 181.8m on its £325.0m revolving credit facility with the remaining balance available to support the Company's working capital and liquidity requirements. The Company also had undrawn commitments on existing investments collectively valued at £49.5m.

The Company's invested portfolio consisted of 61 private debt investments and 7 infrastructure bonds across 8 sectors and 26 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 11.85% and a cash yield of 7.5%. The yield-to-maturity has been rising, which is mainly attributable to the higher interest rate environment and the Company's exposure to floating rate investments, which comprise 58% of the portfolio as of March 2023. The weighted average portfolio life is approximately 3.5 years. Private debt investments represented 98% of the total portfolio. The Company's invested portfolio remains geographically diverse with 50.1% located across the US, 25.6% in the UK, 24.2% in Europe, and 0.1% in Australia/New Zealand.

Recent reductions in asset values continue to be primarily due to increases in risk-free rates and credit spreads. Investors are reminded that these declines are unrealised mark-to-market adjustments that should reverse over time as the investments approach their repayment date (the "pull-to-par" effect). As at March 2023, the pull-to-par is estimated to be worth approximately 6.8p/share over the course of the life of the Company's investments.

The Company's pipeline of economic infrastructure debt investments remains strong and is diversified by sector, sub-sector, and jurisdiction. At month end, approximately 100% of the Company's NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate liquidity to cover margin calls on its hedging book.

The following investments settled in March 2023 (excluding small loan drawings of less than £0.5m):

• The purchase of Samhällsbyggnadsbolaget (SBB) i Norden AB 2026 and SBB i Norden AB 2027 senior corporate bonds for €6.0m and €8.3m respectively. SBB is a social infrastructure property company listed on the Nasdaq Stockholm (Large Cap) and their yield-to-maturity is approximately 10.8%;

• The Company has exchanged approximately £11.3m of Bulb Energy's loan for a majority shareholding in Zoa (see further details below)

• An additional senior loan for £5.08m to Project Octopus, a telecom infrastructure services provider based in the UK; and

• An additional senior loan for £1.7m to Clyde Street, a hotel construction project in Scotland .

No investments sold or prepaid in March 2023

Non-performing loans  

There has been ongoing progress over the past month in relation to the Company's non-performing loans.

The amount owed under the Company's loan to Bulb Energy has been reduced by £11.3 million during the month, following the partial debt-for-equity swap in relation to Zoa, which, as announced previously, is a new pioneering business that owns all the software developed by Bulb and has about 100 employees focused on further developing the software, which will be marketed for sale to energy supply companies in the UK and elsewhere. The Company now owns preference shares in Zoa (in an amount of £11.3 million) and the majority of the ordinary shares in the business, with the balance being owned by management and employees of Zoa.

Further updates will be provided to shareholders in the future when developments occur.

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Cash-on-cash yield (%)	Yield to maturity / worst (%)
Bannister Senior Secured 2025	GBP	Private	Senior	61.0	Accommodation	Health care	11.69	12.99
AP Wireless Junior	EUR	Private	Mezz	58.7	TMT	Telecom towers	4.62	8.04
AP Wireless US Holdco	USD	Private	HoldCo	58.6	TMT	Telecom towers	6.21	9.37
Montreux HoldCo Facility	GBP	Private	HoldCo	57.4	Accommodation	Health care	14.20	14.20
Lightspeed Fibre Group Ltd	GBP	Private	Senior	56.4	TMT	Broadband	6.64	14.54
Infinis Energy	GBP	Private	Senior	56.2	Renewables	Landfill gas	5.79	7.10
Project Tyre	USD	Private	Senior	56.0	Transport assets	Specialist shipping	10.43	10.43
Tracy Hills TL 2025	USD	Private	Senior	55.6	Other	Residential infra	11.12	11.12
Hawkeye Solar HoldCo 2030	USD	Private	HoldCo	54.1	Renewables	Solar & wind	8.96	9.82
Expedient Data Centers Senior	USD	Private	Senior	51.5	TMT	Data centers	10.54	11.01
Workdry	GBP	Private	Senior	50.0	Utility	Utility Services	7.72	7.72
Project Spinnaker	GBP	Private	Senior	49.3	TMT	Broadband	9.69	10.01
GenOn Bowline Senior Secured	USD	Private	Senior	49.3	Power	Energy transition	11.83	11.82
EIF Van Hook TL B 2024	USD	Private	Senior	48.0	Utility	Midstream	10.09	10.02
Madrid Metro	EUR	Private	HoldCo	46.8	Transport assets	Rolling stock	1.39	7.19

Note (1) - excluding accrued interest

Disclaimer: the dividend increase is a target and not a profit forecast

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

LEI: 2138006OW12FQHJ6PX91

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States.  The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration.  No public offering of securities is being made in the United States.

For further information please contact:

Sequoia Investment Management Company  [phone]

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Greg Taylor

Anurag Gupta

Jefferies International Limited  [phone]

Gaudi Le Roux

Stuart Klein

Teneo (Financial PR)    [phone]

Martin Pengelley

Elizabeth Snow

Sanne Fund Services Guernsey Limited   [phone]

(Company Secretary)   

Matt Falla 

Lisa Garnham 

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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