Sequoia Econ Infra - NAV and Investment Update

Sequoia Economic Infrastructure Income Fund

14/02/2023 07:00

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RNS Number : 7803P  Sequoia Economic Infra Inc Fd Ld  14 February 2023

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

14 February 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 93.55 pence per share from the prior month's NAV per share
of 91.99 pence per share, (being the 31 December 2022 cum-income NAV of 93.71
less the dividend of 1.71875 pence per share declared in respect of the
quarter ended 31 December 2022), representing an increase of 1.56 pence per
share. A full attribution of the changes in the NAV per share is as follows:

                                        pence per share
 December NAV                           93.71
 Interest income, net of expenses             0.79
 Asset valuations, net of FX movements        0.77
 Dividends                                   -1.72
 January NAV                                 93.55

 

 

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.

 

Investment Advisor update

 

The Investment Advisor has hired Leah Dean as a dedicated ESG analyst to
further strengthen its ESG capabilities. The role will include enhancing the
Company's ESG reporting, ensuring compliance with various ESG regulatory
reporting matters (e.g., SFDR) and engagement with borrowers with a view to
improving their ESG practices.

During January 2023, the Investment Adviser acquired 334,733 Ordinary Shares
in relation to fees payable for the three-month period ended 31 December 2022.
Following the purchase, the Investment Adviser has an interest in 4,436,464
Ordinary Shares.

Portfolio update

 

As at 31 January 2023, the Company had cash of £49.9m and had drawn £161.9m
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 £56.7m. The Company's invested portfolio consisted of
62 private debt investments and 5 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 11.4% and a cash yield of 7.3%. 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
51.0% located across the US, 24.7% in the UK, 24.1% 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 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 January (excluding small loan drawings of
less than £0.5m):

 

• An additional loan for £14.1m to Project Spinnaker (Toob Limited), a
high-speed Broadband provider in the UK; and

• An additional loan for PLN 15.4m (equivalent to £2.9m) to Green Genius to
finance the construction of solar PV projects in Poland.

 

No investments sold or prepaid in January.

 

Non-performing loans

 

There has been ongoing progress over the past month in relation to the
Company's non-performing loans and there has been no significant changes in
their book value as at 31 January 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   60.3            Accommodation     Health care          11.27                   12.87
 AP Wireless Junior             EUR       Private  Mezz     59.1            TMT               Telecom towers       6.76                    7.90
 AP Wireless US Holdco          USD       Private  HoldCo   58.6            TMT               Telecom towers       6.23                    9.11
 Montreux HoldCo Facility       GBP       Private  HoldCo   57.3            Accommodation     Health care          13.46                   13.90
 Infinis Energy                 GBP       Private  Senior   56.5            Renewables        Landfill gas         5.76                    6.99
 Project Tyre                   USD       Private  Senior   56.4            Transport assets  Specialist shipping  10.43                   10.43
 Tracy Hills TL 2025            USD       Private  Senior   55.7            Other             Residential infra    10.63                   10.62
 Lightspeed Fibre Group Ltd     GBP       Private  Senior   55.7            TMT               Broadband            6.63                    13.65
 Hawkeye Solar HoldCo 2030      USD       Private  HoldCo   54.2            Renewables        Solar & wind         8.96                    9.79
 GenOn Bowline Senior Secured   USD       Private  Senior   53.3            Power             Energy transition    11.83                   11.82
 Expedient Data Centers Senior  USD       Private  Senior   51.6            TMT               Data centers         10.36                   10.82
 Workdry                        GBP       Private  Senior   50.0            Utility           Utility Services     6.96                    6.95
 Project Spinnaker              GBP       Private  Senior   48.9            TMT               Broadband            9.00                    9.49
 EIF Van Hook TL B 2024         USD       Private  Senior   47.3            Utility           Midstream            10.19                   10.95
 Madrid Metro                   EUR       Private  HoldCo   46.5            Transport assets  Rolling stock        1.40                    7.36

 

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

Stuart Klein

 

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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