REG - Sequoia Econ Infra - NAV and Investment Update

Sequoia Economic Infrastructure Income FundAnnouncement

16/05/2025 07:00

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RNS Number : 9028I  Sequoia Economic Infra Inc Fd Ld  16 May 2025

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

 

 

Sequoia Economic Infrastructure Income Fund Limited ("SEQI" or the "Company")

 

Monthly NAV and portfolio update - April 2025

 

 

The NAV per share for SEQI, the largest LSE listed infrastructure debt fund,
increased to 93.04 pence per share from the prior month's NAV per share of
92.55 pence, representing an increase of 0.49 pence per share.

 

                                        pence per share
 31 March NAV                           92.55
 Interest income, net of expenses                0.71
 Asset valuations, net of FX movements          -0.28
 Subscriptions / share buybacks                  0.06
 30 April NAV                                   93.04

 

 

The decline in asset valuations this month was driven by a decrease in the
prices of US bonds, contributing to an overall reduction of 0.37 pence per
share. This was largely attributed to a broader market sell-off in response to
the recent tariff announcements. The portfolio pull-to-par, which is
incremental to NAV as loans mature, is 4.2 pence per share as of April 2025.

 

No expected material FX gains or losses as the portfolio is approximately
100.5% currency-hedged. 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.

 

Well positioned to benefit from high interest rates; 59.3% of portfolio is in
fixed rate investments as of April 2025.

 

Market Summary - April 2025

 

Tariff Impact & Geopolitical Analysis

 

 ·             Recent tariff measures and trade policy shifts between the U.S. and the rest
               of the world have renewed volatility in international financial markets. While
               geopolitical frictions and protectionist rhetoric remain elevated, the 90-day
               pause in the U.S.-China trade dispute announced on 12 May 2025, alongside
               substantial mutual tariff reductions, is a constructive step toward
               de-escalation. President Trump's indication that tariffs are unlikely to
               return to previous peak levels adds some reassurance to the near-term outlook.

 ·             The Investment Adviser continues to monitor these developments closely.
               Although ongoing uncertainty could still weigh on global economic momentum and
               contribute to inflationary pressures in the U.S., U.K., and Eurozone, the
               recent shift provides grounds for cautious optimism that trade tensions may
               stabilise and support a more favourable environment for infrastructure
               investment.

 ·             In general, infrastructure is widely perceived to be defensive and perform
               well in times of heightened volatility. Within the infrastructure sector, the
               Company has no or little exposure to some of the more cyclical subsectors,
               such as oil refining, aviation and container ports.

 

 

 

Interest Rate Announcements and Inflation Data

 

 ·             During April 2025, the 10-year U.S. Treasury yield was notably volatile,
               trading within a range of 4.0% to 4.5%, driven by uncertainty following the
               announcement and subsequent pause of wide-ranging tariffs by the Trump
               Administration. The yield ended the month at 4.2%, broadly unchanged from the
               level at end-March 2025, as markets looked ahead to the anticipated
               commencement of trade negotiations between the U.S. and China.

 ·             In contrast, yields on 10-year Gilts and German Bunds declined over the same
               period, by approximately 0.25% to 4.4% and 0.3% to 2.4% respectively. This was
               partly driven by a rotation into perceived lower-risk assets, and also because
               the European Central Bank reduced the base rate by 0.25% to 2.25% on 17 April.
               The Bank of England also reduced its base rate by 0.25% on 8 May 2025, citing
               disinflationary pressures, while the Federal Reserve maintained its current
               policy stance.

 ·             In the U.S., CPI inflation reduced to 2.3% in April, down from 2.4% in March
               and its lowest level since February 2021. In the Eurozone, CPI inflation held
               steady at 2.2% between March and April. In the U.K., the most recent data on
               CPI inflation shows that it eased to 2.6% during February, from 2.8% in
               January.

 ·             In the near-term, the temporary trade agreement between the U.S. and China,
               which includes a significant reduction in tariffs is expected to further ease
               some inflationary pressures. While headline inflation remains influenced by
               residual supply chain effects and sector-specific dynamics, the de-escalation
               in trade tensions has tempered expectations of further price shocks from
               import costs.

 ·             As inflation gradually abates over time, the likelihood of future interest
               rate cuts increases, making alternative investments such as infrastructure
               more attractive when compared to liquid debt. While the pace and size of
               interest rate cuts will vary across the Company's different investment
               jurisdictions, the general consensus remains one of declining interest rates
               throughout the year.

Portfolio Update - April 2025

 

Revolving Credit Facility and Cash Holdings

 

 ·             As of April 2025 month-end, the Company had drawn £68.1 million on its
               revolving credit facility of £300.0 million and had cash of £28.3 million
               (inclusive of interest income), and undrawn investment commitments of £128.7
               million. The Company's pipeline of opportunities remains strong and further
               updates will be provided to shareholders once more investments are made during
               the next quarter.

 

Portfolio Composition

 

 ·             The Company's invested portfolio consisted of 54 private debt investments and
               5 infrastructure bonds, diversified across 8 sectors and 29 sub-sectors.

 ·             59.3% of the portfolio comprised of senior secured loans ensuring defensive
               positioning.

 ·             It had an annualised yield-to-maturity (or yield-to-worst in the case of
               callable bonds) of 9.88% and a cash yield of 7.33% (excluding deposit
               accounts).

 ·             The weighted average portfolio life decreased marginally to 3.3 years. This
               short duration means that as loans mature, the Company can take advantage of
               higher yields in the current interest rate environment.

 ·             Private debt investments represented 90.8% of the total portfolio, allowing
               the Company to capture illiquidity yield premiums.

 ·             The Company's invested portfolio currently consists of 40.7% floating rate
               investments and remains geographically diversified with 45.1% located across
               the U.S., 25.2% in the U.K. and 29.7% in Europe.

 

 

 

 

 

 

 

 

Portfolio Highly Diversified by Sector and Size

 

 

 

 

 

 

 

 

 

Share Buybacks

 

 ·             The Company bought back 5,297,483 of its ordinary shares at an average
               purchase price of 75.88 pence per share in April 2025.

 ·             The Company first started buying back shares in July 2022 and has bought back
               218,474,545 ordinary shares as of 30 April 2025, with the buyback continuing
               into May 2025. This share repurchase activity by the Company continues to
               contribute positively to NAV accretion.

 

New Investment Activity During April 2025

 

 ·             An additional purchase of Navigator 7.25% - 10/2029 bonds for $8.0m. Navigator
               Holdings Ltd is a market leading owner and operator of liquefied gas carriers,
               owning 56 vessels, and 50% of the world's largest ethylene marine export
               terminal.

 ·             An additional senior loan to Grange Backup Power Ltd for €5.7m. The
               borrower is an Irish power asset linked to a data centre.

 ·             An additional senior loan to Sunrun Radcliffe for $3.9m. The borrower is a
               leader in the US residential solar market.

No investments repaid during April 2025

 

 

Non-performing Loans

 

The Company continues to work towards maximising recovery from the
non-performing loans in the portfolio (equal to 1.0% of NAV): There are no new
announcements this month.

 

There are no further updates on the Company's non-performing loans.

 

Top Holdings

 

 

 

Valuations are independently reviewed each month by PWC.

 

http://www.rns-pdf.londonstockexchange.com/rns/9028I_1-2025-5-15.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/9028I_1-2025-5-15.pdf)

http://www.rns-pdf.londonstockexchange.com/rns/9028I_2-2025-5-15.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/9028I_2-2025-5-15.pdf)

 

 

SEQI Capital Markets Seminar - 22 May 2025

 

The Company will be hosting its annual SEQI Capital Markets Seminar on 22 May
2025 in London at 3pm. The event will bring together key members of the
management team and external experts to discuss developments in the
infrastructure credit market. Topics will include: the evolution of
infrastructure debt as an asset class, trends in a fast-expanding
infrastructure universe, SEQI's market outlook, digitalisation and AI in
investment management, and the value of active management in high-yield
infrastructure strategies.

 

To register for in-person attendance or online joining details please email
Sequoia@teneo.com (mailto:Sequoia@teneo.com) .

 

About Sequoia Economic Infrastructure Income Fund Limited

 

 ·             SEQI is the U.K.'s largest listed debt investor, investing in economic
               infrastructure private loans and bonds across a range of industries in stable,
               low-risk jurisdictions, creating equity-like returns with the protections of
               debt.
 ·             It seeks to provide investors with regular, sustained, long-term income with
               opportunity for NAV upside from its well diversified portfolio. Investments
               are typically non-cyclical, in industries that provide essential public
               services or in evolving sectors such as energy transition, digitalisation or
               healthcare.
 ·             Since its launch in 2015, SEQI has provided investors with nine years of
               quarterly income, consistently meeting its annual dividend per share target,
               which has grown from 5p in 2015 to 6.875p per share in 2023.
 ·             The fund has a comprehensive ESG programme combining proprietary ESG goals,
               processes and metrics with alignment to key global initiatives
 ·             SEQI is advised by Sequoia Investment Management Company Limited (SIMCo), a
               long-standing investment advisory team with extensive infrastructure debt
               origination, analysis, structuring and execution experience.
 ·             SEQI's monthly updates are available here: Monthly Updates -
               seqi.fund/investors/monthly-updates
               (https://www.seqi.fund/investors/monthly-updates/)

 

 

 

For further information please contact:

 

 Investment Adviser                                    +44 (0)20 7079 0480

 Sequoia Investment Management Company Limited         pm@seqimco.com (mailto:pm@seqimco.com)

 Steve Cook

 Dolf Kohnhorst

 Randall Sandstrom

 Anurag Gupta

 Matt Dimond

 Joint Corporate Brokers and Financial Advisers        +44 (0)20 7029 8000

 Jefferies International Limited

 Gaudi Le Roux

 Harry Randall

 J.P. Morgan Cazenove                                  +44 (0)20 7742  4000

 William Simmonds

 Jérémie Birnbaum

 Public Relations                                      +44 (0)20 7260 2700

 Teneo (Financial PR)                                  sequoia@teneo.com (mailto:sequoia@teneo.com)

 Martin Pengelley

 Elizabeth Snow

 Faye Calow

 Alternative Investment Fund Manager (AIFM)            +44 ( (tel:+44%2020%203530%203626) 0) (tel:+44%2020%203530%203626) 20 35303

                                                      626 (tel:+44%2020%203530%203626)
 FundRock Management Company (Guernsey) Limited

 Dave Taylor

+44 ( (tel:+44%2020%203530%203626) 0) (tel:+44%2020%203530%203626) 20 35303
 Chris Hickling                                        626 (tel:+44%2020%203530%203626)

+44 ( (tel:+44%2020%203530%203626) 0) (tel:+44%2020%203530%203626) 20 35303
                                                       626 (tel:+44%2020%203530%203626)

sequoia-aifm@fundrock.com (mailto:sequoia-aifm@fundrock.com)
 Administrator / Company Secretary                     +44 (0)20 3530 3107

 Apex Fund and Corporate Services (Guernsey) Limited   Admin.Sequoia@apexgroup.com (mailto:Admin.Sequoia@apexgroup.com)

 +44 ( (tel:+44%2020%203530%203626) 0) (tel:+44%2020%203530%203626) 20 35303
 626 (tel:+44%2020%203530%203626)

sequoia-aifm@fundrock.com (mailto:sequoia-aifm@fundrock.com)

 

 

Administrator / Company Secretary

Apex Fund and Corporate Services (Guernsey) Limited

 

+44 (0)20 3530 3107

Admin.Sequoia@apexgroup.com (mailto:Admin.Sequoia@apexgroup.com)

 

 

 

 

 

 

 

 

 

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.

 1  (#_ftnref1) Given the dividend was announced on 17 April 2025, the
ex-dividend date for the interim dividend of 1.71875 pence per share is 1 May
2025 (based on the Dividend Procedure Timetable for 2025
(https://docs.londonstockexchange.com/sites/default/files/documents/dividend-procedure-timetable-2025.pdf)
). As such, the dividend payment will be reflected in the NAV decomposition
table in the forthcoming NAV announcement for May 2025.

 

 2  (#_ftnref2) Percentage of overall NAV for non-performing loans has
declined from 2.3% in March 2025 to 1.0% in April 2025, as the new total is
excluding Bulb, where the Investment Adviser now expects a full recovery.

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