Sequoia Economic Infra Inc Fd Ld NAV and Investment Update (1858F)

TIDMSEQI

RNS Number : 1858F

Sequoia Economic Infra Inc Fd Ld

13 November 2020

13 November 2020

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

NAV update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 98.96 pence per share from the prior month's NAV of 98.61 pence per share (being the 30 September 2020 cum-income NAV of 100.17 pence less the dividend of 1.5625 pence per share declared in respect of the quarter ended 30 September 2020), representing an increase of 0.35 pence per share.

A full attribution of the changes in the NAV per share is as follows:

 
                                       pence per 
                                         share 
-------------------------------------  --------- 
September NAV                           100.17 
Dividend declared for quarter ending 
 30 September 2020                       -1.56 
Adjusted opening NAV                     98.61 
Interest income, net of expenses         0.45 
FX movements, net of hedges              0.25 
Decrease in asset valuations             -0.35 
October NAV                              98.96 
=====================================  ========= 
 

Update on the effects of COVID-19 on the Portfolio

The Investment Adviser, the Investment Manager, and PWC, the independent valuation agent, have continued their close analysis of the effects of COVID-19 on the Company's portfolio which also includes a market benchmarking exercise to conclude on spread and yield adjustments for each of the investments. The Investment Adviser is also closely monitoring the Company's assets that have not been performing as expected. The decline in asset valuations can be attributed primarily to PWC adjusting the marks of certain private loans where Borrowers continue to face challenges associated with the COVID-19 crisis, including for example where reduced demand or sales have impacted the Borrowers' short term liquidity positions. This reduction has been partially offset by gains on assets in the telecommunications sector that have been performing better than expected throughout this period and have seen valuations improve significantly.

Broadly speaking, the spread widening across the portfolio during the second half of March 2020 continued its reversal until August and remained stable since then, with several of the Company's investments performing better than expectations after the initial lockdown.

Further Portfolio update

As at 30 October 2020, the Company had cash of GBP116.5m and had drawn GBP80.5m on its GBP280m Revolving Credit Facility. The Company also had undrawn commitments on existing investments collectively valued at GBP18.1m. As of 30 October 2020, the Company's invested portfolio comprised of 60 private debt investments and 12 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 9.6% and a cash yield of 6.3%. Based on the Investment Adviser's analysis of our current portfolio we continue to believe that our annual dividend remains fully cash covered, net of all expenses. The weighted average portfolio life is approximately 5.5 years. Private debt investments represented 94% of the total portfolio and 62% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 97.0% of par. Investments which are pre-operational represented 11.1% of total assets.

The Company's invested portfolio remains geographically diverse with 52% located across the US, 16% in the UK, 26% in Europe, and 6% 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.

At month end, approximately 100% of the Company's NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate resources to cover margin calls on its hedging book.

The Company's settled investment activities during October include:

-- An additional $0.1m disbursement to Bourzou Equity, a company created for a data centre in Virginia.

The following Company's investments were sold or prepaid in October:

-- A GBP8.5m loan to Forsa Energy, a company with a portfolio of gas-fired flexible generation assets in the UK, at 106.5% of purchase price; and

-- A EUR30.6m loan to Aliwin Plus SL, a portfolio of operational solar PV plants in the Cáceres region of Spain.

Ordinary Portfolio Summary (15 largest settled investments)

 
 Investment name     Currency        Type    Ranking   Value       Sector     Sub-sector   Cash-on-cash          Yield 
                                                        GBPm                                      yield    to maturity 
                                                         (1)                                        (%)        / worst 
                                                                                                                   (%) 
 
 AP Wireless                                                                     Telecom 
  Junior                EUR      Private        Mezz    62.4          TMT         towers           4.25           6.25 
 Hawaiki Mezzanine                                                              Undersea 
  Loan                  USD      Private        Mezz    55.1          TMT          cable           9.01          11.31 
 Warnow Tunnel          EUR      Private      Senior    49.7    Transport           Road           1.54           4.30 
 Expedient Data 
  Centers               USD      Private      Senior    49.6          TMT   Data centers           5.67           5.84 
 Euroports 2nd 
  Lien 2026             EUR      Private        Mezz    44.1    Transport           Port           8.06           8.60 
 Scandlines 
  Mezzanine 
  2032                  EUR      Private      HoldCo    43.5    Transport        Ferries           6.95           7.67 
 Bannister Senior                                                                 Health 
  Secured               GBP      Private      Senior    42.1       Accom.           care           6.58           6.77 
 Hawkeye Solar                                                                     Solar 
  HoldCo 2030           USD      Private      HoldCo    42.1   Renewables         & wind           9.25           9.25 
                                                                             Electricity 
 Bizkaia TL 2021        EUR      Private      HoldCo    41.2        Power     generation           7.80           8.57 
 Jetpeaks HoldCo                                                             Electricity 
  2027                  USD      Private      HoldCo    40.7        Power     generation           7.49           8.02 
 Terra-Gen Power                                                                   Solar 
  TL B                  USD      Private      Senior    40.5   Renewables         & wind           5.34           6.75 
 Tracy Hills TL                                                              Residential 
  2025                  USD      Private      Senior    39.9        Other          infra           8.15           8.15 
 Adani Abbot 
  HoldCo 
  2021                  AUD      Private      HoldCo    39.6    Transport           Port           6.72          17.20 
 Kenai HoldCo                                                                Electricity 
  2024                  EUR      Private      HoldCo    39.4        Power     generation           0.00          11.60 
                                                                             Electricity 
 GenOn Bowline          USD      Private      Senior    38.6        Power     generation           8.00           8.00 
 

Note (1) - excluding accrued interest

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

Anurag Gupta

Jefferies International Limited [phone]

Gaudi le Roux

Neil Winward

   Tulchan Communications (Financial PR)                                    [phone] 

Martin Pengelley

Elizabeth Snow

Laura Marshall

   Praxis Fund Services Limited (Company Secretary)               [phone] 

Matt Falla

Katrina Rowe

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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November 13, 2020 02:00 ET (07:00 GMT)