REG - Sequoia Econ Infra - NAV and Investment Update

Sequoia Economic Infrastructure Income FundAnnouncement

16/06/2022 07:00

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RNS Number : 0501P  Sequoia Economic Infra Inc Fd Ld  16 June 2022

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

16(th) June 2022

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

NAV update

The NAV for SEQI, the specialist investor in economic infrastructure debt,
decreased to 98.39 pence per share from the prior month's NAV of 98.75 pence
per share, representing a decrease of 0.36 pence per share. A full attribution
of the changes in the NAV per share is as follows:

 

                                   pence per share
 April NAV                         98.75

 Interest income, net of expenses   1.17
 FX movements, net of hedges       0.01
 Decrease in asset valuations                -1.54
 May NAV                           98.39

Portfolio update

 

As at 31 May 2022, the Company had cash of £170.20m and had drawn £123.10m
on its £325m revolving credit facility. The Company also had undrawn
commitments on existing investments collectively valued at £63.0m. The
Company's invested portfolio consisted of 63 private debt investments and 8
infrastructure bonds across 8 sectors and 27 sub‑sectors. It had an
annualised yield‑to‑maturity (or yield‑to‑worst in the case of
callable bonds) of 9.1% and a cash yield of 6.9%. The weighted average
portfolio life is approximately 4.1 years. Private debt investments
represented 95% of the total portfolio and 49% of the portfolio comprised
floating rate assets. Investments which are pre‑operational represented 13%
of total assets.

 

The Company's invested portfolio remains geographically diverse with 53%
located across the US, 16% in the UK, 29% in Europe, and 2% in Australia/New
Zealand. Currently the Company is not investing in Portugal or Italy but has
selectively invested in opportunities in Spain. 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 resources to cover margin calls on its
hedging book.

 

The decrease in asset valuations in May can predominantly be attributed to two
factors. Firstly, the income of PIK interest on Bulb, Hatch and Hawaiki, which
equally increased the interest income, from 0.61 in April to 1.17 in May 22.
Secondly, the valuation of fixed rate investments also declined during the
month, primarily due to increases in term interest rates.

 

The Investment Advisor continues to focus on the Company's non-performing
loans, as discussed below:

 

• Bulb Energy: as disclosed in last month's factsheet, the Company received
an interim distribution of £10 million from the administrators appointed to
Simple Energy (the parent of Bulb Energy). This paid all the interest that had
accrued on the loan since the borrower entered administration, and reduced the
loan balance by approximately £7.5 million;

 

• the overall position, consisting of £10 million of cash received plus the
valuation of the remaining amount of the loan, is very close to last month's
valuation of the loan and the fall in the valuation of the loan this month
simply reflects the paydown and not a deterioration in the prospects for the
loan's recovery;

 

• Salt Lake Potash: the Investment Advisor continues to work with the
Receiver and other parties on the resolution of this investment. Currently,
there is an active M&A process underway to sell the business, which is
expected to be completed over the coming months, at which point additional
information can be provided to investors; and

 

• Whittle School: as discussed previously, the borrower and its lenders
(including the Company) have executed the definitive documentation that has
put the borrower's capital structure on a more stable, long-term basis. On the
back of that, the borrower has begun to execute its strategy for realising
value from the property. The Investment Adviser believes that this is a very
positive step forward.

 

The Company's settled investment activities during May include:

 

• a loan for $50m to Exmar Netherlands BV, a specialist shipping company
based in Antwerp, Belgium;

• an additional loan of $22.5m to Genon Bowline Power LLC, an electricity
generator based in New York, USA;

• an additional purchase of $5.8m to AP Wireless Domestic Investments II,
LLC, a worldwide cell site lease investment firm, based in California, USA;

• an advance of $3.0m to Whittle School, a property tenanted by a private
school in Washington DC, USA. The purpose of the funds is to fund property
operating expenses, fund the reserve account and transactions costs;

• an additional £1.3m disbursement to Clyde Street, a hotel construction
project in Glasgow, Scotland; and

• an additional $0.3m disbursement to Lanthanum, a leading developer of
hyperscale data centres in Virginia, USA.

 

 

The following assets sold or prepaid in May:

 

• a loan of $65m to Hawaiki, an undersea cable linking Australia, New
Zealand, American Samoa, Hawaii, and the US West Coast. Hawaiki is based in
Auckland, New Zealand;

• a loan of $30m to Bourzou Equity LLC, a company created for a data centre
in Virginia, USA;

• a loan of €19.7m to Hatch Copley Limited, a student accommodation
provider based in Cork, Ireland; and

• a loan of £20m to Altas Smart Metering, a UK smart metering company based
in London.

 

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  GBP       Private  Senior   64.7            Accommodation     Health care        7.29                    7.58
 AP Wireless Junior        EUR       Private  Mezz     60.1            TMT               Telecom towers     6.32                    6.45
 Infinis Energy            GBP       Private  Senior   59.9            Renewables        Landfill gas       5.43                    6.09
 AP Wireless US Holdco     USD       Private  HoldCo   59.0            TMT               Telecom towers     6.05                    6.90
 Hawkeye Solar HoldCo      USD       Private  HoldCo   54.4            Renewables        Solar & wind       8.71                    9.19
 GenOn Bowline Senior      USD       Private  Senior   54.4            Power             Energy transition  8.00                    8.00
 Tracy Hills TL 2025       USD       Private  Senior   54.4            Other             Residential infra  9.06                    9.06
 Project Camden            EUR       Private  HoldCo   54.1            Power             Base load          7.66                    8.01
 Brightline                USD       Private  Senior   53.3            Transport         Rail               8.32                    8.81
 Madrid Metro              EUR       Private  HoldCo   52.4            Transport assets  Rolling stock      1.34                    6.19
 Expedient Data Centers    USD       Private  Senior   51.5            TMT               Data centers       6.31                    6.31
 Lightspeed Fibre Group    GBP       Private  Senior   48.9            TMT               Broadband          7.11                    7.38
 Sacramento Data Centre    USD       Private  Senior   48.2            TMT               Data centers       7.00                    7.00
 Project Nimble            EUR       Private  HoldCo   45.0            TMT               Data centers       8.37                    9.21
 Kenai HoldCo 2024         EUR       Private  HoldCo   43.4            Power             Base load          0.00                    11.65

Note (1) - excluding accrued interest

The Company's monthly investor report and additional portfolio disclosure will
be made available at http://www.seqifund.com/ (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                              +44 (0)20
7079 0480

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Greg Taylor

Anurag Gupta

 

Jefferies International
Limited
+44 (0)20 7029 8000

Gaudi le Roux

Neil Winward

 

Tulchan Communications (Financial
PR)                                    +44
(0)20 7353 4200

Martin Pengelley

Elizabeth Snow

Laura Marshall

 

Sanne Fund Services Guernsey Limited

(Company Secretary)
 
+44 (0) 1481 755530

Matt Falla

Katrina
Rowe

 

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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