Sequoia Econ Infra - NAV and Investment Update

Sequoia Economic Infrastructure Income Fund

17/01/2023 07:00

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RNS Number : 9047M  Sequoia Economic Infra Inc Fd Ld  17 January 2023

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

17(th) January 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 93.71 pence per share from the prior month's NAV per share
of 93.25 pence per share, representing an increase of 0.46 pence per share.

 

                                        pence per share
 November NAV                           93.25
 Interest income, net of expenses       0.74
 Asset valuations, net of FX movements  -0.28
 December NAV                           93.71

 

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.

Portfolio update

 

As at 31 December 2022, the Company had cash of £59.3m and had
drawn £163.8m 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 £61.3m. The Company's invested portfolio
consisted of 62 private debt investments and 6 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 11.6% and a cash yield
of 7.4%. The weighted average portfolio life is approximately 3.6 years.
Private debt investments represented 98% of the total portfolio and 59% of the
portfolio comprised floating rate assets.

 

The Company's invested portfolio remains geographically diverse with
51.9% located across the US, 23.7% in the UK, 24.2% in Europe, and 0.2%
in Australia/New Zealand. 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.

 

Over recent months, reductions in asset values have been primarily due to
increases in risk-free rates and credit spreads. The rise in risk-free rate
adjustments have also increased the yield-to-maturity of floating rate
investments and reduced the clean price of fixed rate assets (which further
increases the yield-to-maturity). 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).

 

The following investments settled in December (excluding small loan drawings
of less than $0.5m):

 

• An additional loan for £10.0m to Lightspeed, a high-speed Broadband
provider in the UK;

• An additional loan for £2.5m to Clyde Street, a hotel construction
project in Scotland; and

• An additional senior loan for $1.4m to Sunrun Safe Harbor Holdco LLC, a
manufacturer of solar energy equipment in the USA.

 

No investments sold or prepaid in December.

 

Non-performing loans

 

There has been ongoing progress over the past month in relation to the
Company's two non-performing loans and there has been no significant
write-downs as at 31 December 2022.

Dividend payment

 

The quarterly dividend with respect to the third quarter of the 2022 financial
year is expected to be declared in January 2023. In November 2022, the
annualised target dividend increased by 10% from 6.25p to 6.875p per share,
with effect from the 3(rd) quarter of the current financial year ending 31(st)
March 2023.

 

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   60.4            Accommodation     Health care          10.0                    11.8
 AP Wireless US Holdco          USD       Private  HoldCo   59.4            TMT               Telecom towers       6.3                     9.4
 Project Tyre                   USD       Private  Senior   57.5            Transport assets  Specialist shipping  10.4                    10.4
 AP Wireless Junior             EUR       Private  Mezz     57.4            TMT               Telecom towers       7.0                     8.5
 Montreux HoldCo Facility       GBP       Private  HoldCo   57.3            Accommodation     Health care          13.5                    13.9
 Tracy Hills TL 2025            USD       Private  Senior   56.7            Other             Residential infra    10.6                    10.6
 Infinis Energy                 GBP       Private  Senior   54.9            Renewables        Landfill gas         5.9                     7.4
 Hawkeye Solar HoldCo 2030      USD       Private  HoldCo   54.9            Renewables        Solar & wind         9.0                     9.9
 GenOn Bowline Senior           USD       Private  Senior   54.3            Power             Energy transition    11.8                    11.8
 Lightspeed Fibre Group Ltd     GBP       Private  Senior   53.5            TMT               Broadband            6.9                     14.5
 Expedient Data Centers         USD       Private  Senior   52.1            TMT               Data centers         10.4                    11.1
 Workdry                        GBP       Private  Senior   50.0            Utility           Utility Services     7.0                     7.0
 EIF Van Hook TL B 2024         USD       Private  Senior   47.9            Utility           Midstream            10.0                    10.8
 Sacramento Data Centre Senior  USD       Private  Senior   46.7            TMT               Data centers         7.5                     8.6
 Madrid Metro                   EUR       Private  HoldCo   46.2            Transport assets  Rolling stock        1.4                     7.6

 

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/ (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

 

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

Martin Pengelley

Elizabeth Snow

 

Sanne Fund Services Guernsey Limited
                                    +44 (0)
20 3530 3107

(Company Secretary)
 

Matt
Falla

Shona
Darling

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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