Sequoia Economic Infra Inc Fd Ld NAV and Investment Update (7784L)

TIDMSEQI

RNS Number : 7784L

Sequoia Economic Infra Inc Fd Ld

15 January 2021

15 January 2021

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 101.65 pence per share from the prior month's NAV of 100.27 pence per share, representing an increase of 1.38 pence per share.

The gain in asset valuations this month can be attributed primarily to the increase in valuation of several sizeable Company positions that have seen material credit improvements and outperformed expectations.

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

 
                                   pence per 
                                     share 
---------------------------------  --------- 
November NAV                        100.27 
Interest income, net of expenses     0.74 
FX movements, net of hedges          -0.14 
Increase in asset valuations         0.78 
December NAV                        101.65 
=================================  ========= 
 

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 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 December, with several of the Company's investments performing better than expectations despite the various governmental COVID-19 induced restrictions in various countries. Spread tightening driven by credit improvements was evident across various sectors in the portfolio which resulted in uplifts to valuations of the relevant assets.

Further Portfolio update

As at 31 December 2020, the Company had cash of GBP102.6m and had drawn GBP149.0m on its GBP280m Revolving Credit Facility. The Company also had undrawn commitments on existing investments collectively valued at GBP158.3m. The Company's invested portfolio comprised of 63 private debt investments and 11 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 9.3% and a cash yield of 5.7%. 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 4.1 years. Private debt investments represented 95% of the total portfolio and 63% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 97.3% of par. Investments which are pre-operational represented 8.4% of total assets.

The Company's invested portfolio remains geographically diverse with 48% located across the US, 15% in the UK, 31% 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 December include:

-- A EUR76.1m primary loan in Madrid Metro, financing 4 SPVs that lease rolling stock to the Madrid Metro;

-- An EUR18.0m primary investment in Ziton Wind Entreprise's bonds, an offshore wind turbine maintenance company located in Denmark;

-- An additional $25m investment in Tracy Hills, a residential infrastructure project in California;

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

The Company's investments that were sold or prepaid in December include:

-- A $45m sale of General Electric's 5% perpetual bonds, a diversified industrial conglomerate.

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 
                                                                                                                   (%) 
 
                                                                Transport        Rolling 
 Madrid Metro           EUR      Private      HoldCo    68.2       assets          stock           1.30           5.40 
 AP Wireless                                                                     Telecom 
  Junior                EUR      Private        Mezz    62.1          TMT         towers           4.25           6.25 
 Tracy Hills TL                                                              Residential 
  2025                  USD      Private      Senior    56.1        Other         infra.           8.15           8.15 
 Hawaiki Mezzanine                                                              Undersea 
  Loan                  USD      Private        Mezz    55.0          TMT          cable           8.55           9.56 
 Warnow Tunnel 
  Tranches              EUR      Private      Senior    52.5    Transport           Road           1.37           2.26 
 Expedient Data 
  Centers               USD      Private      Senior    47.0          TMT   Data centers           5.68           5.85 
 Care4U Senior                                                                    Health 
  Secured               EUR      Private      Senior    45.3       Accom.           care           6.50           6.50 
 Euroports 2nd 
  Lien 2026             EUR      Private        Mezz    45.3    Transport           Port           7.81           7.92 
 Scandlines 
  Mezzanine 
  2032                  EUR      Private      HoldCo    44.2    Transport        Ferries           0.00           9.13 
 Bannister Senior                                                                 Health 
  Secured               GBP      Private      Senior    42.1       Accom.           care           6.58           6.78 
 Adani Abbot 
  HoldCo                AUD      Private      HoldCo    42.1    Transport           Port           5.76          15.33 
 Hawkeye Solar                                                                     Solar 
  HoldCo                USD      Private      HoldCo    39.9   Renewables         & wind           8.25           8.25 
 Ziton Senior                                                   Transport     Specialist 
  Secured 2022          EUR      Private      Senior    38.9       assets       shipping           8.86          14.95 
 Jetpeaks HoldCo                                                             Electricity 
  2027                  USD      Private      HoldCo    38.6        Power     generation           7.49           8.02 
 Terra-Gen Power                                                                   Solar 
  TL B                  USD      Private      Senior    38.6   Renewables         & wind           5.31           6.55 
 

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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January 15, 2021 02:00 ET (07:00 GMT)