Sequoia Economic Infra Inc Fd Ld NAV and Investment Update (4489I)

TIDMSEQI

RNS Number : 4489I

Sequoia Economic Infra Inc Fd Ld

14 December 2020

14 December 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 100.27 pence per share from the prior month's NAV of 98.96 pence per share, representing an increase of 1.31 pence per share.

The gain in asset valuations this month can be attributed primarily to the noticeable spread tightening of comparable investments across the portfolio following the announcement of the coronavirus vaccines and the US election results.

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

 
                                   pence per 
                                     share 
---------------------------------  --------- 
October NAV                          98.96 
Interest income, net of expenses     0.64 
FX movements, net of hedges          -0.03 
Increase in asset valuations         0.70 
November NAV                        100.27 
=================================  ========= 
 

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.

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

Further Portfolio update

As at 30 November 2020, the Company had cash of GBP60.2m and had drawn GBP80.1m on its GBP280m Revolving Credit Facility. The Company also had undrawn commitments on existing investments collectively valued at GBP145.1m. As of 30 November 2020, the Company's invested portfolio comprised of 61 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 9.2% and a cash yield of 6.0%. The weighted average portfolio life is approximately 5.5 years. Private debt investments represented 94% of the total portfolio and 64% 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 11.0% of total assets.

The Company's invested portfolio remains geographically diverse with 51% located across the US, 16% in the UK, 27% 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 98.0% 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 November include:

-- A $30.0m Opco loan to Cardinal States Gathering Company LLC backed by 7 interconnecting natural gas pipelines throughout the US;

-- An additional $10.0m Holdco disbursement to CSG Holdings, which owns 100% of Cardinal States Gathering Company LLC;

-- An additional EUR10.6m disbursement to Care4U Invest, an Irish residential and day services provider for adults with an intellectual disability;

-- An additional EUR7m purchase of Ziton AS' 6.90% 2022 first-lien bonds backed by three offshore wind maintenance vessels;

-- An additional $2m purchase of Navigator Holdings' 8% 2025 bonds, a leading player within the transportation of liquified gases;

-- An additional $0.4m disbursement to Bourzou Equity, a company created for a data center in Virginia.

None of the Company's investments were sold or prepaid in November.

Ordinary Portfolio Summary (15 largest settled investments)

 
 Investment       Currency        Type    Ranking   Value       Sector        Sub-sector   Cash-on-cash          Yield 
 name                                                GBPm                                         yield    to maturity 
                                                      (1)                                           (%)        / worst 
                                                                                                                   (%) 
 
 AP Wireless                                                                     Telecom 
  Junior             EUR      Private        Mezz    62.1          TMT            towers           4.25           6.25 
 Hawaiki 
  Mezzanine                                                                     Undersea 
  Loan               USD      Private        Mezz    53.4          TMT             cable           9.00          11.32 
 Warnow Tunnel 
  Tranches           EUR      Private      Senior    49.4    Transport              Road           1.54           4.29 
 Expedient Data 
  Centers            USD      Private      Senior    48.1          TMT      Data centers           5.67           5.84 
 Care4U Senior                                                                    Health 
  Secured            EUR      Private      Senior    45.3       Accom.              care           6.50           6.50 
 Euroports 2nd 
  Lien 2026          EUR      Private        Mezz    44.7    Transport              Port           7.92           8.24 
 Scandlines 
  Mezzanine 
  2032               EUR      Private      HoldCo    43.3    Transport           Ferries           0.00           7.67 
 Bannister 
  Senior                                                                          Health 
  Secured            GBP      Private      Senior    42.1       Accom.              care           6.58           6.78 
 Bizkaia TL                                                                  Electricity 
  2021               EUR      Private      HoldCo    41.1        Power        generation           7.78           8.24 
 Adani Abbot 
  HoldCo 
  2021               AUD      Private      HoldCo    41.1    Transport              Port           6.58          14.70 
 Hawkeye Solar                                                                     Solar 
  HoldCo 2030        USD      Private      HoldCo    40.8   Renewables            & wind           9.25           9.25 
 Jetpeaks 
  HoldCo                                                                     Electricity 
  2027               USD      Private      HoldCo    39.5        Power        generation           7.49           8.02 
 Kenai HoldCo                                                                Electricity 
  2024               EUR      Private      HoldCo    39.2        Power        generation           0.00          11.71 
 Terra-Gen 
  Power                                                                            Solar 
  TL B               USD      Private      Senior    39.1   Renewables            & wind           5.35           7.20 
 Tracy Hills TL                                                              Residential 
  2025               USD      Private      Senior    38.6        Other            infra.           8.15           8.15 
 

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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December 14, 2020 02:00 ET (07:00 GMT)