Sequoia Economic Infrast... Share Discussion Threads

[speedsgh] 03/5/2017 12:57

Ordinary Share Issue, Placing Programme, NAV update and Proposed Amendment to the Investment Policy -

Further to the announcement on 24 April 2017 and in light of what the Board consider to be the growing set of attractive investment opportunities in the economic infrastructure debt market, the Board of Directors has resolved to proceed with a partially pre-emptive issue of Ordinary Shares seeking to raise £125 million (before expenses). The Directors have determined that the Ordinary Shares will be issued at an Issue Price of 105.5 pence per new Ordinary Share.

The Investment Adviser continues to see significant opportunities in the infrastructure debt market and the Board believes that it would be in the interests of the Company to raise further funds to take advantage of these opportunities. The Board believes that the current opportunities available to the Investment Adviser will enable the Company to further diversify the Group's existing portfolio, spread the fixed costs of running the Company across a wider base and increase secondary market liquidity for investors.

NAV update
The Board is pleased to announce that the latest unaudited NAV of the Company, as at 11 April 2017, is 102.86 pence per share. This includes a dividend of 1.5 pence per Ordinary Share which was declared (but not yet paid) on 20 April 2017. Adjusted for the dividend payment, the Company's unaudited NAV per share on 11 April 2017 would have been 101.36 pence (the "Adjusted NAV").

The Ordinary Share Issue (the "Issue")
The Issue will be implemented by way of an Open Offer, Placing and Offer for Subscription of Ordinary Shares. The target size of the Issue is £125 million before expenses.

The Issue Price of 105.5 pence represents a premium of approximately 4.1 per cent. to the Adjusted NAV per Ordinary Share of 101.36 pence and a discount of approximately 5.4 per cent. to the closing price of 111.5 pence per existing ordinary share on 2 May 2017.

The new Ordinary Shares issued pursuant to the Issue will rank pari passu in all respects with the existing Ordinary Shares. For the avoidance of doubt, the new Ordinary Shares will not be entitled to the interim dividend for the period ended 31 March 2017, declared on 20 April 2017 and expected to be paid on 24 May 2017. Subscribers for the new Ordinary Shares will however be entitled to any dividend in respect of the period ended 30 June 2017, which is expected to be declared in July 2017.

The Directors recognise the importance of pre-emption rights to Ordinary Shareholders. Accordingly, a substantial proportion of the new Ordinary Shares (being 119,172,138 new Ordinary Shares) are being initially offered to Qualifying Shareholders by way of an Open Offer pursuant to which they will be entitled to apply for 1 new Ordinary Share for every 5 existing Ordinary Shares held on the Record Date. The balance of the Ordinary Shares, together with any Ordinary Shares not allocated to Qualifying Shareholders under the Open Offer (including under an Excess Application Facility), will be made available, at the discretion of the Directors, under the Placing and/or Offer for Subscription.

The Directors may, at their discretion, issue up to a maximum number of approximately 151.7 million new Ordinary Shares pursuant to the Issue if the Directors, in consultation with the Investment Adviser and Stifel, believe that appropriate opportunities exist for the deployment of additional Issue proceeds, although there is no certainty that the maximum number of Ordinary Shares will be issued, even if sufficient investor demand exists.

The Company expects to publish a prospectus (the "Prospectus") in connection with the Issue shortly.

The Investment Adviser has compiled a target portfolio based on an investment pipeline of opportunities in excess of £440 million. Of the potential investments, 60% of the assets are senior secured debt instruments, 75% are floating rate debt instruments and 71% are based in the UK. The Company will invest the Net Issue Proceeds in accordance with the Company's Investment Policy. However, there can be no assurance that any of those investments will remain available for purchase after the Issue or, if available, at what price the investments can be acquired. The acquired portfolio, therefore, may be substantially different from the investment pipeline described in the Prospectus.

It is estimated that 75 per cent. of the Net Issue Proceeds will be invested within three to four months of Admission and that substantially the full amount of the Net Issue Proceeds will be fully invested within six months after Admission.

Benefits of the Issue
The Directors believe that proceeding with the Issue will have the following benefits:

· provide the Company with additional capital to take advantage of the currently available pipeline of opportunities which should enable the Group to further diversify its existing portfolio;

· create the potential to enhance the NAV per Ordinary Share of existing Ordinary Shares through new share issuance at a premium to NAV per Ordinary Share, after the related costs have been deducted;

· grow the Company, thereby spread the Company's fixed running costs across a wider base of shareholders and benefit from the reducing scale of charges for the Investment Adviser, thereby reducing the total expense ratio;

· a greater number of Shares in issue and a wider base of shareholders is likely to improve liquidity in the market;

· increase the size of the Company which should help make the Company more attractive to a wider base of investors; and

· the availability of Ordinary Shares to new investors, under the Ordinary Share Placing and Offer for Subscription, offers the prospect of a wider and more diversified shareholder base, and an increased opportunity to grow the Company with the benefits of scale and liquidity for Existing Shareholders.

The Placing Programme
In addition to the Issue, the Directors have resolved to implement a Placing Programme for up to 200 million ordinary shares which will become effective on 3 May 2017. The Placing Programme is being created to provide the Company with flexibility should it wish to raise further capital as new investment opportunities arise over the next 12 months.

The Directors believe that instituting the Placing Programme will:

· create the potential to enhance the NAV per Ordinary Share of existing Ordinary Shares through new share issuance at a premium to NAV per Ordinary Share, after the related costs have been deducted;

· grow the Company, thereby spread operating costs over a larger capital base and benefiting from the reducing scale of charges for the Investment Adviser, which should reduce the total expense ratio;

· partially satisfy market demand from time to time for Ordinary Shares and improve liquidity in the market for Ordinary Shares; and

· enable the Company to raise additional capital quickly, in order to take advantage of investment opportunities that have been identified and which may be identified in the future.

Any future Net Placing Programme Proceeds raised will be invested in accordance with the Investment Policy. The Placing Programme Shares will be issued at an issue price calculated by reference to the prevailing Net Asset Value per Ordinary Share at the time together with a premium intended to cover, at a minimum, the costs and expenses of the relevant placing of Ordinary Shares (including, without limitation, any placing commissions). It is the intention of the Directors, however, that no Placing Programme Shares will be issued prior to 85 per cent. of the proceeds of the Issue being invested or committed...

Proposed Amendment to the Investment Policy
The Company will seek approval from Shareholders to adopt an amended investment policy for the Company in order to (amongst other clarificatory changes) increase the jurisdictional diversification limit with respect to the United States from 50 per cent. to 60 per cent. of the Company's total assets.

The Investment Adviser is seeing a growing number of attractive opportunities in the U.S. due to a combination of macroeconomic and political factors. The immediate asset pipeline contains £100 million equivalent worth of North American investment opportunities. These projects are spread across Telecommunication, Media and Technology Infrastructure, Power and other infrastructure sectors of the Investment Policy. Currently, the Investment Adviser has limited the number of investments in the United States in the Company's pipeline due to the current 50 per cent. maximum constraint contained in the Investment Policy, and the Directors believe an increase to 60 per cent. would benefit the portfolio by allowing the Company to access a wider range of transactions, with attractive risk/return profiles.

[speedsgh] 14/3/2017 11:13

Latest NAV to 28/2/17 is 102.88p -

102.88p as at 28/2/17
102.37p as at 31/1/17
102.48p as at 31/12/16
101.36p as at 30/11/16
102.00p as at 31/10/16
101.29p as at 30/9/16
100.44p as at 31/8/16
100.78p as at 29/7/16
101.16p as at 30/6/16
98.07p as at 31/5/16
97.69p as at 29/4/16
98.20p as at 31/3/16
97.04p as at 29/2/16
96.38p as at 29/1/16
96.50p as at 31/12/15
95.61p as at 30/11/15
95.95p as at 30/10/15
96.20p as at 30/9/15

[wirralowl] 08/6/2016 08:44

Confirmation of successful c share equity issue - SEQI managed to raise £175m against a targeted £150m, so plenty of demand here...

[wirralowl] 07/6/2016 15:17

With 'lower for longer' looking like the outlook for interest rates now after Friday's shocking NFP number, I decided to buy a stake in SEQI today @ 103.61.

Since I last discussed this company, they've developed into a nicely diversified lending company in the economic infrastructure sector. Never going to set the world alight in terms of SP, but all the loans/bonds are senior/secured and they're on course to hit their dividend target of 6pps pa now, or 5.8% at my purchase price.

For those interested, I've added a video link from proactive investors to the header (dated April 2016), which gives more info on the company's activities and progress...

[wirralowl] 24/7/2015 11:07

Hi cyfran, and thanks for the link, interesting interview.

jonwig's outlined many of the reasons I haven't invested too, primarily the current premium to NAV, and the fact that NAV is falling due to the currency issues (in the video its claimed they have a hedging programme in place, but so far it doesn't seem to be doing the job intended!).

Also, the fact that they only provide debt rather than the build and/or management of facilities (like most other infra funds), presumably means they won't be able to offer dividend growth in line with inflation, and makes it difficult for me to see where potential capital gains could come from.

[jonwig] 24/7/2015 05:40

cyfran - multiple currency issues, mainly - they don't seem to hege forex. Also I'm quite overweight in infra funds.

But also, they have a relatively small number of investments (16, and 50% invested) so one going sour would have a big impact.

NAV is 96p, maybe I'd look again if the premium narrowed a bit more.

Thanks for that proactive link.

[cyfran101] 23/7/2015 20:14

Brief discussion on their MO

hxxp://www.proactiveinvestors.co.uk/companies/stocktube/3979/sequoias-cook-on-infrastructure-investment-opportunities-3979.html

[cyfran101] 23/7/2015 20:13

Hi Wirral Owl & Jonwig

I'd be interested to know what is keeping you on the sideline.

[jonwig] 23/7/2015 13:37

"Still not invested here" - nor am I, but it's worth watching! Currency moves seem to be driving the NAV.

[wirralowl] 23/7/2015 12:47

Still not invested here, but I'll post the latest investment update for my and anyone else's reference:

14 July 2015

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 30 June 2015 and Investment Update

The Board of Directors of the Company is pleased to announce the unaudited net asset value per Ordinary Share ("NAV") as at 30(th) June 2015 of 95.92 pence. The NAV includes income for the period since Admission.

As of the 30(th) June 2015, the Company owned 12 infrastructure bonds and four loans, collectively valued at GBP72.7m including accrued interest, with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 7.5% and an average life across the acquired portfolio of approximately 8.0 years. Of these, eight transactions were indicated to investors in the Prospectus as being part of the Target Portfolio and eight are new transactions.

Acquisitions in June comprise a mezzanine loan on a UK PPP road project, a loan to a US aircraft leasing business, mezzanine bonds on a UK elderly care business and senior bonds issued by a German wind turbine manufacturer.

In addition, the Company has purchased two loans with an aggregate purchase price of approximately GBP10.6m that are in the process of settling (and as such are not currently reflected in the NAV).

In aggregate, the purchase price of these 18 transactions will represent approximately 57.3% of the net proceeds of the IPO. The investments are across the UK, Western Europe and the US and include the road, rail, shipping, utility, elderly care and aircraft leasing sectors.

The Company has not disposed of any investments since the IPO.

The decrease in the Company's NAV of c.1.7% arises primarily from:

-- a decline in the value of the dollar versus Sterling of 2.7% during June, which reduced the NAV by c.0.8%; plus

-- a decline in the value of the euro versus Sterling of 1.3% during June, which reduced the NAV by c.0.3%; plus

-- a negative mark-to-market adjustment on acquired assets of c.0.8% of NAV, as risk aversion led to widening credit spreads across markets.

-- these were offset in part by interest income of c.0.3%.

[wirralowl] 23/7/2015 12:45

Gone ex-div today, on their maiden dividend, announced 15th July, of 1pps:

15 July 2015

Sequoia Economic Infrastructure Income Fund Limited (the "Company")
Dividend Declaration

Dividend for Period Ended 30 June 2015

The Directors of the Company have declared that an interim dividend will be payable as follows in respect of the period ended 30 June 2015:

Ex-Dividend Date: 23 July 2015

Record Date: 24 July 2015

Payment Date: 14 August 2015

Dividend per Share: 1 pence per share
For further information please contact:

[wirralowl] 15/6/2015 09:19

RNS Number : 9665P

Sequoia Economic Infra Inc Fd Ld

12 June 2015

12 June 2015

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 29 May 2015 and Investment Update

The Board of Directors of the Company is pleased to announce the unaudited net asset value per Ordinary Share ("NAV") as at 29(th) May 2015 of 97.63 pence. The NAV includes income for the period since Admission.

As at the 29th May 2015, the Company owned ten infrastructure bonds and two loans, collectively valued at GBP57.0 million, including accrued interest, with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 7.3% and an average life across the acquired portfolio of approximately 9.0 years. Of these, six were indicated to investors in the Prospectus as being part of the Target Portfolio and six are new transactions.

Investments added in May include a senior loan to Biffa, a UK company that operates PFI, municipal and commercial waste collection and management services; a senior secured bond issued by CHC Group, a Canadian helicopter lessor; and a small bond position (that will be increased over time) issued by Care UK, a leading UK operator of nursing homes and other healthcare services.

In addition, the Company has purchased two loans, one bond, and one incremental investment in a loan it has already purchased, with an aggregate purchase price of approximately GBP17.4m that are in the process of settling (and as such are not currently reflected in the NAV).

In aggregate, the purchase price of these 15 transactions (excluding accrued interest) will represent approximately 50.2% of the net proceeds of the IPO. The investments are across the UK, Western Europe and the US and include the road, rail, shipping, utility and aircraft leasing sectors.

The Company has not disposed of any investments since the IPO.

The slight decrease in the Company's NAV of approximately 0.17% arises primarily from a decline in the value of the Euro versus Sterling (down 1.8% month-on-month), which reduced the NAV by approximately 0.35%, and negative mark-to-market adjustments on acquired assets. These were offset in part by interest accretion on the acquired portfolio.

May saw 17 infrastructure transactions close totalling over $18bn, although a staggering $11.5bn relates to the Corpus Christi LNG facility in the United States. Notable was the significant number of solar plants that reached financial close. Other asset types included rail and road transactions in the United States and Australia.

Bristol Airport, wholly-owned by Ontario Teachers Pension Plan, successfully completed a transaction that mixed 7- and 10-year bank loans with a 15-year institutional tranche. Another landmark transaction was the Yozgaz Hospital in Turkey, the first hospital PPP to achieve an 18-year tenor relying solely on commercial lenders. Finally, a milestone was reached with the issuance of senior and junior bonds to finance the Moscow-St Petersburg availability road PPP.

The Bristol Airport transaction demonstrated that some institutional investors are comfortable with high gearing, as EBITDA of GBP39m would result in gross leverage of roughly 8.3x. The Turkish hospital provides an interesting pricing comparison for senior debt, at 350 bps over mid-swaps.

During May, the 10-year US Treasury widened slightly from 2.03% to 2.12% while Bunds moved from 0.36% to 0.49%. Corporate High Yield indices were approximately flat, with for example the Bloomberg USD High Yield Corporate Bond Index moving from 156.4 to 157.0. While strong demand for senior infrastructure debt is keeping margins narrow, we are still finding opportunities to deploy mezzanine funding at attractive yields.

[wirralowl] 24/4/2015 09:18

A bit more detail here:

Sequoia Economic Infrastructure Income Fund Limited
Net Asset Value as at 31 March 2015 and Investment Update ~ 15 April 2015
16 April 2015

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 31 March 2015 and Investment Update

The Board of Directors of the Company is pleased to announce the Net Asset Value as at 31 March 2015 of 98.23p per share.

While some parts of the market have experienced a degree of yield compression, attractive pricing is still available for the Company’s target investments, with senior spreads broadly unchanged from prior to the IPO and typical mezzanine margins remaining in the region of 4-6%. As such, as at 31 March 2015, the Company had invested in six infrastructure bonds valued at £25.8m, including accrued interest, with an annualised yield to maturity (or yield to worst in the case of callable bonds) of 6.9% and an average life across the acquired portfolio of approximately 10.5 years. Of these investments, five were indicated to investors in the Prospectus as being part of the Target Portfolio. Details of the existing six positions which have settled will be disclosed in the Company’s monthly factsheet which will be made available at www.seqifund.com.

In addition, as at the 31 March 2015, the Company had purchased three loans plus an incremental order on one of the six bonds already purchased. The aggregate purchase price of these investments – which had not settled by the end of March and therefore are not reflected in the NAV – is approximately £18.9m.

The purchase price of these nine transactions represents approximately 30% of the net proceeds of the IPO.

The nine transactions include loans and bonds to the road, rail, utility and aircraft leasing sectors and are to borrowers in Western Europe, the US and the UK. In aggregate the price paid, and the yield achieved, are in line with the Company’s target yield.

The Board is pleased with the initial deployment of IPO proceeds and believes that the Company is on target to achieve the anticipated deployment schedule anticipated at launch. In addition, the Board confirm their expectation to pay its first dividend for the period end June 2015 in line with its year one target of a 5% dividend yield with reference to the IPO issue price.

Unless otherwise defined, capitalised terms used in this announcement have the same meaning as those defined in the Prospectus

[wirralowl] 24/4/2015 09:17

Not invested here, as of yet, but as no one else has started a thread, and its the type of IT that I'm interested in (an income generating fund) thought I'd set one up.

Extract taken from Shares Magazine 23 April 2015:

With the UK base rate still mired at 0.5%, income remains a major theme for investment trust investors. They are able to sate appetites for the risk-adjusted returns on offer from economic infrastructure through Sequoia Economic Infrastructure Income Fund (SEQI). Raising £150 million at 100p-a-share through its Main Market IPO (3 March), Sequoia’s investment objective is to provide regular, sustained, long-term distributions as well as capital growth through a diverse portfolio of senior and subordinated economic infrastructure debt investments. These will be in assets spanning ports, pipelines, water and waste assets, as well as transportation equipment, renewable energy assets and even student accommodation and elderly care facilities.

The fund has a distribution target of 5pps for the first year, with 6pps/pa the target thereafter.

Excellent article on the compnay and its activities from Proactive Investors: [...]

Website:



Monthly Factsheet:

Estimated portfolio sensitivities (as of May 16)

Change in NAV
Interest rates +0.5%(5) -1.7%
Interest rates -0.5% 1.8%
Interest rates +1.0% -3.3%
Interest rates -1.0% 3.8%
Euro +/- 5% (against GBP) 0.5%
Dollar +/- 5% (against GBP) 1.2%
Euro down 5% and dollar up 5% -0.7%


16 May 2016

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 29 April 2016 and Investment Update

Company update

As of the 29th April 2016, the Company held 17 infrastructure bonds and 19 private debt investments, collectively valued at £286.9m 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 5.9 years.
The investments are diverse 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 and aircraft leasing.
Approximately 53% of the Company portfolio comprised of floating rate assets, with only four LIBOR floors (other than those at zero percent). As such the portfolio's yield is likely to increase over time if LIBOR increases.
Investments in April include senior secured bonds issued by All Aboard Florida, owner and developer of a privately-owned express passenger rail infrastructure project between Miami and Orlando. In addition, the company has made an incremental investment in Green Plains Processing LLC.
During the month, the Company had its position in Viridian Group Holdings 13.5% 2020 private bonds called by the issuer. The result was a 20.5% realised IRR (annualised) on a par amount of approximately £5m.

Company NAV performance

The decrease in Company NAV to 97.69p per share (ex-div) arose primarily through:

-- Interest income net of expenses of 0.33p;
-- A gain of 1.22p in asset valuations;
-- A dividend declared of 1.50p; and
-- A decline of 0.56p on net FX movements.
Portfolio Summary (15 largest settled investments)


Transaction Currency Type Ranking Value Sector Sub-sector Yield
name GBPmm to
(1) maturity
/ worst
(%)

A'lienor
S.A.S. (A65) EUR Private Senior 28.4 Transport Road 5.33
Solar
Infinis Bridge GBP Private HoldCo 24.0 Renewables & Wind 8.70
Exeltium
Mezzanine EUR Private Mezz 17.8 Power PPA 8.83
Danaos Snr Transport
Secured 2018 USD Private Senior 17.3 assets Shipping 9.59
Neoen Production Solar
1 S.A.S.U EUR Private HoldCo 15.3 Renewables & Wind 6.99
Biffa TL
A GBP Private Senior 13.0 Utility Waste 6.73
Green Plains Alternative
TL B USD Private Senior 9.2 Other Fuel 10.89
Dulles Greenway
2029 USD Public Senior 8.4 Transport Road 6.85
Reliance
Rail Finance Transport Rolling
2018 AUD Private Senior 8.1 assets Stock 7.28
North Las
Vegas Water
6.572% 2040 USD Public Senior 8.0 Utility Water 6.79
Bristow Group Transport
6.25% 2022 USD Public Mezz 7.7 assets Aircraft 10.38
Columbia
Pipeline
5.8% 2045 USD Public Senior 7.2 Utility Pipelines 5.40
NRG Energy
Inc 7.785% Elec
2021 USD Public Senior 7.1 Power Generation 6.61
All Aboard
Florida USD Public Senior 6.7 Transport Rail 13.34
Care UK L+500 Elderly
2019 GBP Public Senior 6.6 Accommodation Care 11.42


-------------------------------------------- ------- ------ -------------- ------------ ----------

Video Interview: April 2016 courtesy of ProactiveInvestors:

[...]