Sequoia Economic Infrast... Share Discussion Threads

[my retirement fund] 06/10/2023 10:11

Yes, what were the losses for Sequoia on Bulb, was it 100% ?

[zeppo] 06/10/2023 10:10

Prepared before 414 but not posted until after it.

Bulb was taken over by Octopus.

Why would SEQI still invest in their technology?

[williamcooper104] 06/10/2023 10:09

Octy took the customer base SEQI were left with the tech

[zeppo] 06/10/2023 10:03

Bulb was taken over by Octopus.

Why would SEQI still invest in their technology?

[scburbs] 06/10/2023 09:48

Let’s just hope they aren’t investing any fresh capital in the Bulb technology as someone will have to fund the losses until they get some contracts (or other investors). It may (or may not) be a great investment, but it isn’t their business to invest in tech companies.

[my retirement fund] 06/10/2023 08:17

First purchase for me 77.1p

[cocopah] 05/10/2023 18:29

Disappointing that the market is kicking the sh*t out of this share. Proper share buyback ongoing, credit risk being well managed and divi well covered. Perhaps an increase in dividend to 7p and an update on any income they are driving from the Bulb technology would help … but I continue to hold and remain more impressed with this BOD than many others atm.🤔

[cocopah] 15/9/2023 13:47

I like the way that senior management have taken the bull by the horns by being aggressive with the share buyback. They have also improved their underwriting team and finished the work on the property in Washington, which is now good to go for a sale. I think they will resolve the Bulb issue without a major loss event. The new investment in Generation Bridge (electric power) is both meaningful and has great earning potential.

Given that the dividend cover is getting better and better, I would like to see SEQI up the dividend again (to 7p) sooner rather than later. Overall, I remain impressed and will hold.

It probably helps that the board have quite a bit of skin in the game at 85p (from memory).👍
27995;😎

[badtime] 15/9/2023 09:21

Likewise added this morning

[catch007] 15/9/2023 08:07

Decent update today imho I added to my holding circa 80p after the previous NAV & investment update based on the pull to par scenario which still has some way to run (still underwater with SEQI). Good yield, disclosed bad debts now contained to 3.3% of NAV, buy backs and pull to par all create attractions for SEQI now.

[tiltonboy] 14/9/2023 12:31

Update due in next couple of days

[davebowler] 14/9/2023 12:20

Citywire-
High-yielding Sequoia hopes ‘unusual’; pull-to-par rerates shares
Steve Cook, manager of the 8%-yielding infrastructure loan fund, explains why the portfolio will recover from the quickest interest rate hikes in the UK since the 1980s.

BY
JAMIE COLVIN

Sequoia Economic Infrastructure Income (SEQI) fund manager Steve Cook believes the ‘pull-to-par’ of many of the investment company’s bonds trading below their launch price will help to narrow the shares’ current 13% discount to net asset value.

Speaking to Citywire, Cook said the ‘unusual’; event was caused by Sequoia increasing the discount rates applied to the £1.3bn portfolio of short-term private loans and bonds in line with central banks’ aggressive rate hikes, which depressed their valuation.

However, the trust’s floating rate bonds, which make up 60% of assets at an average 3.3-year duration, will bounce back to their launch price as they approach their repayment date, assuming there are no writedowns or hits to their value.

As a consequence, the portfolio’s ‘yield to maturity’, or total return from maturing bonds, has shot up from 9.8% to 12% in the last 12 months.

An update last month estimated the pull-to-par would be worth about 6.1p per share over the course of the closed-end fund’s investments, which includes private loans and bonds to companies in areas such as digital infrastructure, energy transition, renewable power and transport.


Since the closed-end fund launched in March 2015, a typical year would see a pull-to-par of a fraction of 1%, but this year, it creates a really interesting total return story for investors, Cook (pictured below) said.

‘You’re getting a 6.875p dividend on the 83p shares and some NAV growth built in, you could say, and hopefully we can address the discount as well. I can’t promise to narrow the discount, but if you take the first two, which are contractual, you get a really good total return story.’

Steve Cook - Sequoia
In the past three months the shares have risen 6.5%, leaving shareholders with a flat total return including dividends over one year.

Its board has also been busy buying back the shares, with 73m purchased since July 2022 totalling approximately £60m.

Other steps taken to reduce the discount includes bringing in new investors to support the shares, the largest of which currently are Investec, Rathbones and Quilter, with respective holdings of 9%, 5.2% and 5.1%, according to Refinitiv.


As interest rates look close to peaking, Cook is increasing the weighting to fixed rate loans to capture the current high rates, across the assets that span the UK, North America, Europe, Australia and New Zealand.

Cook will reduce the weighting to telecoms, the largest sector weighting at 30.3% of assets, over the coming months, which he believes is slightly too high, despite their high-yielding defensive nature.

He added that the portfolio is ungeared, meaning there are no expensive debt costs to service.

Cook is working on extracting value from the trust’s two non-performing loans, Bulb Energy, and Connecticut 4000 Avenue, a private school based in Washington DC that went bust, that make up 3.2% of assets.

In the case of Bulb, a senior secured loan, SEQI became the majority shareholder through a partial debt‑for‑;equity swap, of Zoa, a newly formed business set up to market Bulb’s best-in-class software to energy supply companies in the UK and elsewhere. It has recovered £14m in cash since Bulb went into administration last year.

In the case of Connecticut 4000 Avenue, SEQI co-owns the newly refurbished building with two other companies.

The portfolio’s largest individual position is a £58.9m senior secured loan to Bannister, a provider of long-term supported and residential living facilities for adults with learning disabilities, that matures in 2025.

Another large £54.5m senior secured loan is renewable energy platform Infinis, the UK’s largest generator of low carbon power from captured methane.

[cocopah] 18/8/2023 15:57

I think the buybacks have kind of done the business on the share price so far (and will continue to do so) but I also think that the dividend should be increased again. It is definitely affordable and would support the share price. 🤷‍a94;️🤔

[uapatel] 17/8/2023 06:23

‘Pull to par’ could make 8%-yielder Sequoia an appealing punt

[gateside] 15/8/2023 13:54

I have set up a Watchlist on LSE, and use that for checking for RNS information at 7amADVFN also highlights shares in your portfolio if there is a news release.

[jonwig] 15/8/2023 11:57

New owners. They've done a lot to improve it, but I suspect it will become a subscription service when the changes are complete.

[speedsgh] 15/8/2023 09:32

Yes, I used to use Investegate for daily alerts and reading rns announcements but it became so unreliable that I then switch to advfn for alerts and the used LSE for actually reading the updates (I prefer the formatting on LSE). But frustrating that some rns don't seem to show (always seems to be NAV updates for some reason). I think there was recently an MBO or similar at Investegate and I think they have now got their game back in order so may look at starting to use them again.

[spangle93] 15/8/2023 09:07

cheers jonwig - I used investegate for my 7am fix and for research for years, but it went shonky about 3 months ago. Looks like it's now got back all the functionality it previously had.

[jonwig] 15/8/2023 07:03

It's on Investegate, which pulls its data from the LSE:

[spangle93] 15/8/2023 06:59

Thanks speedsgh - not sure why the NAV UPdate is not showing on London Stock Exchange RNS list whereas the daily "transaction in shares" is?

[speedsgh] 15/8/2023 06:21

NAV and Investment Update -

NAV update

The NAV per share for SEQI, the specialist investor in economic infrastructure debt, increased to 92.41 pence per share from the prior month's NAV per share of 91.95 pence, (being the 30 June 2023 cum-income NAV of 93.67 less the dividend of 1.71875 pence per share declared in respect of the quarter ended 30 June 2023 and paid in August 2023), representing an increase of 0.46 pence per share...

Portfolio update

The Company is attractively positioned from a liquidity perspective with cash of GBP101.7m available, compared to undrawn commitments on existing investments of GBP36.1m. The Company's is currently not geared and its revolving credit facility is undrawn, resulting in additional capacity to manage future volatility in exchange rates, while simultaneously reducing cash drag on non-invested capital. The Company also has an active pipeline of new investments with attractive yields in the current interest rate environment and intends to draw on the revolving credit facility when appropriate while prudently balancing its capital allocation. Further updates will be provided to shareholders upon the completion of these deals during the summer of 2023. The pipeline is diversified by sector, sub-sector, and jurisdiction, with yields ranging from 9% -11%...

... The following investments settled in July 2023 (excluding small loan drawings of less than GBP0.5m):

-- Two additional Senior loans for GBP3.4m to Project Octopus, a telecom infrastructure services provider based in the UK; and

-- An additional Senior loan for PLN 7.6m (equivalent to GBP1.5m) to Green Genius to finance the construction of solar PV projects in Poland.

No investments sold or prepaid in July 2023

Non-performing loans

The Investment Advisor continues to actively manage its two non-performing loans (which together represent 3.5% of NAV) with the loans independently marked to market by PwC as part of the monthly valuation process. Further updates will be provided to shareholders in the future when developments occur.

[cocopah] 27/7/2023 16:20

… narrowing more is what I meant … tbf if you take the share price correction following the influence of rising interest rates and then the levelling off/drop in inflation, then the narrowing has been marginal.🤷‍♂️

[chucko1] 27/7/2023 07:16

Worth reflecting that we have just gone 1.7p or so ex-div with around 0.3p price drop. You won't get rich immediately as a holder, but it's a further example of the irrationality of the infra IT price movements of late.

Worth taking advantage of the weak in these circumstances. Unabashedly.

[tiltonboy] 25/7/2023 06:13

It has been narrowing

[cocopah] 24/7/2023 19:09

Frustrating that the discount isn’t narrowing here, especially with the buybacks being relatively aggressive. 🤷‍a94;️