Sequoia Economic Infra Inc Fd Ld NAV and Investment Update (1657C)

TIDMSEQI

RNS Number : 1657C

Sequoia Economic Infra Inc Fd Ld

14 June 2019

14 June 2019

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 31 May 2019 and Investment Update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 103.04p from the prior month's NAV of 102.62p per share. The changes in NAV arose primarily through:

   --      Interest income net of expenses of 0.75p; 
   --      A decrease of 0.21p in asset valuations; and 
   --      Unhedged FX losses of 0.12p. 

As at 31 May 2019, the Company had cash of GBP46.9m and outstanding drawings on its Revolving Credit Facility of GBP175.4m, resulting in net leverage of GBP128.5m. The Company also had undrawn commitments and three additional investments in settlement, collectively valued at GBP136.3m. On 14 May 2019, the Company announced the successful close of an additional GBP50m accordion tranche of its Revolving Credit Facility, increasing the maximum facility amount to GBP200m.

The Company's invested portfolio comprised 51 private debt investments and 21 infrastructure bonds across 8 sectors and 26 sub-sectors and had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.4% and a weighted average life of approximately 4.2 years. Private debt investments represented 84.0% of the total portfolio and 70.5% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 94.9% of par. Investments which are pre-operational represented 16.9% of total assets.

The Company's invested portfolio remains geographically diverse with 46% located across the US, 18% in the UK, 28% in Europe, and 9% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy but has selectively invested in opportunities in Spain. The Company's pipeline of economic infrastructure debt investments remains strong and is diversified by sector, sub-sector, and jurisdiction.

Approximately 96% of the Company's NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate resources to cover the cash costs associated with its hedging activities.

The Company's settled investment activities during May include:

-- A NOK 218.0m primary purchase of Exmar's variable rate bonds maturing in 2022, backed by LNG and LPG vessels;

-- An additional EUR10.2m secondary bond purchase of ferry operator Naviera Armas SA's variable rate 2023 bonds;

   --      A final $2.6m disbursement to Whittle Schools in Washington D.C.; 

-- An initial $2.9m disbursement to Bourzou Equity LLC, a company created for the construction of a data center in Virginia;

   --      An additional $1.7m secondary loan acquisition of Midcoast Energy's TL B; and 

-- An additional GBP1.3m secondary loan acquisition of Elysium Healthcare's TL B, a leading behavioural health services provider in the UK.

The Company also sold its position in Talen Energy's 6.5% 2024 bonds in May.

Ordinary Portfolio Summary (15 largest settled investments)

 
 Investment name         Currency        Type    Ranking      Value       Sector     Sub-sector          Yield 
                                                            GBPm(1)                                to maturity 
                                                                                                       / worst 
                                                                                                           (%) 
 
 Hawaiki Mezzanine                                                                     Undersea 
  Loan                      USD       Private       Mezz       58.0          TMT          cable           10.1 
 Salt Creek Midstream       USD       Private     Senior       54.6      Utility      Midstream            8.5 
 Tracy Hills TL                                                                     Residential 
  2025                      USD       Private     Senior       47.5        Other          infra           10.4 
 Scandlines Mezzanine 
  2032                      EUR       Private     HoldCo       45.5    Transport        Ferries            6.1 
 Bannister Senior 
  Secured                   GBP       Private     Senior       42.1      Accomm.    Health care            8.0 
 Adani Abbot HoldCo 
  2021                      AUD       Private     HoldCo       41.2    Transport           Port            9.5 
 Kaveh Senior 
  Secured TL 2021           USD       Private     Senior       39.6          TMT   Data centers            8.2 
 Whittle Schools                                                                        Private 
  B                         USD       Private     Senior       39.4        Other        schools           11.1 
                                                                                    Electricity 
 Bizkaia TL 2021            EUR       Private     HoldCo       36.4        Power           gen.            7.7 
 Aquaventure                USD       Private     Senior       35.6      Utility          Water            8.1 
 Bulb Senior TL                                                                     Electricity 
  2021                      GBP       Private     Senior       35.0      Utility         supply            7.2 
                                                                                        Solar & 
 Project Warsaw             EUR       Private     Senior       31.7   Renewables           wind            5.9 
                                                                                        Solar & 
 Sunrun Hera 2017-B         USD       Private       Mezz       31.3   Renewables           wind            8.1 
 Seaport TL B               USD       Private     Senior       30.6    Transport           Port            8.6 
 Sacramento Data 
  Centre                    USD       Private     Senior       30.1          TMT   Data centers           11.0 
 

Note (1) - excluding accrued interest

Market Summary

A total of 33 project finance transactions closed in May throughout the Company's eligible jurisdictions, worth $20.9bn in aggregate. Notable transactions, outside of the Company's investment activities, during the month include:

   --      A EUR228m financing of the 300MW Talasol solar PV plant in Spain; 

-- A z 1.25bn financing for the construction of the 219.5MW Potegowo wind farm in northern Poland; and

-- A CAD 500m financing for the modernisation of the Ottawa district energy system that heats and cools over 80 buildings in Ottawa.

Data released in June showed the US economy growing by 3.1% in Q1 2019, driven primarily by a build-up in inventories. Deteriorating US-China relations and a May jobs figure of 75,000 have both contributed to cautious market sentiment. In the last week of May, the yield curve inverted the most since 2007.

The Eurozone remains vulnerable to a slowdown in global trade due to its reliance on export countries for growth. Positive Eurozone economic indicators include unemployment which has fallen to 7.7% and wage growth which continues to increase across member states.

The UK economy recently contracted due to temporary factors including a decline in car production. It was reported in June that UK GDP fell by 0.4% as output of motor vehicles producers fell 24%. It is expected that the UK economy is likely to experience more subdued growth for the rest of 2019.

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

LEI: 2138006OW12FQHJ6PX91

For further information please contact:

   Sequoia Investment Management Company                              [phone] 

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Greg Taylor

Stifel Nicolaus Europe Limited [phone]

Neil Winward

Mark Bloomfield

Gaudi Le Roux

   Tulchan Communications (Financial PR)                                   [phone] 

James Macey White

Martin Pengelley

Elizabeth Snow

   Praxis Fund Services Limited (Company Secretary)               [phone] 

Matt Falla

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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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June 14, 2019 02:00 ET (06:00 GMT)