Sequoia Economic Infra Inc Fd Ld Net Asset Value(s) (7712W)

TIDMSEQI

RNS Number : 7712W

Sequoia Economic Infra Inc Fd Ld

14 February 2017

14 February 2017

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 31 January 2017 and Investment Update

Ordinary Share update

During January, the Company had invested or committed to invest a total of GBP83.6m which resulted in the total invested portfolio representing approximately 91% of the Company's NAV as of the 31(st) January 2017.

The portfolio held 29 private debt investments and 14 infrastructure bonds for a total of 43 investments that covered 8 sectors and 23 subsectors, and are collectively valued at GBP560.8m including accrued interest with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.1% and a weighted average life across the acquired portfolio of approximately 4.6 years.

As of the 31(st) January 2017, the Company had gross leverage of GBP40m which represents approximately 6.6% of NAV. The Company remains confident in its ability to deploy the proceeds of the equity raise into its attractive pipeline of opportunities.

Approximately 42% of the portfolio comprises floating rate assets, with only three LIBOR floors above current LIBOR levels (of which one is 1 month USD and the others are EUR). As such, the portfolio's yield is likely to rise over time as LIBOR increases.

The investments are across the UK, Western Europe, Australia, Canada and the US and include a wide range of asset types including road, rail, utility, power, shipping, renewables, aircraft and ship leasing.

In the second half of January, investments made by the Company include:

-- A primary participation of GBP30m in a senior secured bridge loan issued by HC-One, a leading UK care homes owner and operator;

-- A primary participation of GBP18.3m in a junior term loan issued by Welcome Break, a UK motorway services provider;

-- A secondary acquisition of EUR12m in a senior loan held by Latécoère SA, an aircraft component company; and

-- Incremental investments in the following assets: Green Plains TL B, Castlelake 2016-1 C loan, Alinta Energy TL B, Bristow 6.25% 2022 bonds, and NRG Energy 7.25% 2026 bonds.

Sterling rose against the Dollar and fell slightly against the Euro during the month of January; however, the Investment Adviser remains committed to reducing NAV volatility arising from FX movements by maintaining its hedging strategy. As of the 31(st) January 2017, approximately 76% of NAV consisted of either Sterling assets or was hedged into Sterling.

The Company has more than adequate resources to cover the cash costs associated with its hedging activities. Each of its FX hedge providers has credit lines to the Company which means that the margin calls on the hedge portfolio have been modest.

The decrease in the Ordinary Share NAV to 102.37p per share from 102.48p in December 2016 arose primarily through:

   --       An increase of 1.38p in asset valuations; 
   --       Interest income net of expenses of 0.21p; 
   --       A decrease of 0.21p from FX movements; and 
   --       A dividend declaration of 1.50p. 

On the 18(th) January 2017, the Company declared a dividend of 1.5 pence with respect to the three month period ending the 31(st) December 2016. The shares traded ex-dividend from the 26(th) January, with payment on the 24(th) February.

Ordinary Portfolio Summary (15 largest settled investments)

 
 Transaction          Currency        Type    Ranking      Value          Sector        Sub-sector       Yield 
  name                                                   GBPm(1)                                            to 
                                                                                                      maturity 
                                                                                                       / worst 
                                                                                                           (%) 
 
 A'lienor 
  S.A.S. (A65)           EUR       Private     Senior       37.5       Transport              Road        3.47 
 AP Wireless 
  Infrastructure         GBP      Private      Senior       30.0             TMT            Towers        6.32 
 IO Data Centers                                                                              Data 
  LLC                    USD      Private      Senior       29.8             TMT           Centers        9.00 
 Beamish HoldCo                                                                             Health 
  2017                   GBP       Private     Senior       29.6   Accommodation              Care       12.37 
                                                                                              Data 
 Abteen Ventures         USD       Private     Senior       27.8             TMT           Centers        8.00 
 Regard Group                                                                               Health 
  Mezzanine              GBP       Private       Mezz       22.9   Accommodation              Care       12.12 
 Natgasoline                                                                            Industrial 
  Senior Unsecured       USD       Private       Mezz       19.9           Other    Infrastructure       10.00 
 Exeltium 
  Mezzanine              EUR       Private       Mezz       18.9           Power               PPA        9.40 
 Welcome Break                                                                            Motorway 
  No.1 Ltd               GBP       Private       Mezz       18.3       Transport          Services        8.36 
 Danaos Snr                                                            Transport 
  Secured 2018           USD      Private      Senior       17.6          Assets          Shipping       18.37 
 Bristow Group                                                         Transport 
  6.25% 2022             USD      Public         Mezz       17.3          Assets          Aircraft        8.39 
                                                                                             Solar 
 Neoen Production        EUR       Private     HoldCo       16.2      Renewables            & Wind        6.99 
 Green Plains                                                                          Alternative 
  TL B                   USD       Private     Senior       14.1           Other              Fuel        6.54 
 Longview                                                                                     Elec 
  TL B                   USD       Private     Senior       13.7           Power        Generation       10.27 
 Alinta Energy                                                                                Elec 
  TL B                   USD       Private     Senior       13.4         Utility            Supply        6.58 
 

Note (1) - excluding accrued interest

Market Summary

January was a slow month for the infrastructure finance sector, with only five deals reaching financial close throughout North America and Western Europe.

The largest deal which closed in January was the Cricket Valley Energy Centre in Dover, New York. The financing was for the development of the 1.1GW combined-cycle natural gas-fired plant, and consisted of $700m equity and a syndicated loan of $875m.

USD 3m Libor rose above 1.0% in January for the first time since 2009 with the expectation that this will continue to rise in 2017 based on minutes of the December Federal Reserve meeting. In contrast, the ECB remained dovish relative to the Fed by maintaining rates and their QE strategy for 2017 despite meaningful eurozone inflation, particularly in Germany.

During January, Sterling rose against the Dollar and fell slightly against the Euro, ending the month at $1.26 and EUR1.16 respectively. The Bloomberg USD High Yield Corporate Bond Index rose to 172.5.

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

Sequoia Investment Management Company

   Randall Sandstrom / Steve Cook                         Telephone [phone] 

Stifel Nicolaus Europe Limited

   Neil Winward / Mark Bloomfield / Gaudi Le Roux              Telephone [phone] 

International Fund Management Limited

Chris Hickling Telephone [phone]

About Sequoia Economic Infrastructure Income Fund Limited

The Company is a Guernsey registered closed-ended investment company that 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. The Company has been advised that the Shares can be considered as "excluded securities" for the purposes of the FCA rules regarding the definition and promotion of Non-Mainstream Pooled Investments (NMPIs).

This information is provided by RNS

The company news service from the London Stock Exchange

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February 14, 2017 02:00 ET (07:00 GMT)