Sequoia Economic Infra Inc Fd Ld NAV and Investment Update (9404P)

TIDMSEQI

RNS Number : 9404P

Sequoia Economic Infra Inc Fd Ld

14 February 2019

14 February 2019

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 31 January 2019 and Investment Update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 101.38p from the prior month's NAV of 100.28p per share (being the 31 December cum-income NAV less the dividend of 1.5 pence per share declared in respect of the quarter ended 31 December). The changes in NAV arose primarily through:

   --      Interest income net of expenses of 0.76p; 
   --      An increase of 0.40p in asset valuations; and 
   --      A decrease of 0.07p from FX movements. 

During the month, the Company deployed the remaining equity issue proceeds into additional economic infrastructure debt investments and did not make any further drawings on its Revolving Credit Facility. The Company's own cash balance after deducting total net borrowings of GBP55.2m was -GBP5.9m. Company also had undrawn commitments, and two additional investments in settlement, collectively valued at GBP188.7m.

The Company's invested portfolio comprised of 49 private debt investments and 20 infrastructure bonds across 8 sectors and 25 sub-sectors and had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.7% and a weighted average life of approximately 5.4 years. Private debt investments represented 85.2% of the total portfolio and 65.8% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 96.2% of par. Investments which are pre-operational represented 16.2% of total assets.

The Company's invested portfolio remains geographically diverse with 47% located across the US, 16% in the UK, 27% in Europe, and 10% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy but has invested in selective opportunities in Spain. The Company's pipeline of economic infrastructure debt investments remains strong and is diversified by sector, sub-sector, and jurisdiction.

As at 31 January 2019, approximately 97% 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 January include:

   --      An initial GBP10.0m primary loan to Bulb Energy, an electricity supplier in the UK; 
   --      An additional $7.8m disbursement to Whittle Schools; 
   --      An additional GBP5.0m secondary purchase of Elysium Healthcare's B1 facility; 

-- An additional GBP2.0m secondary purchase of Euro Garages term loan B, one of the largest motorway service station operators in the UK; and

-- An additional EUR1.8m secondary purchase of Ziton A/S floating rate 10/2021 bonds, an offshore wind turbine maintenance company operating in the North Sea.

No investments were sold, called, or prepaid during January.

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       54.2          TMT              cable           11.4 
 Salt Creek Midstream       USD       Private     Senior       52.6      Utility          Midstream            8.5 
 Tracy Hills TL                                                                         Residential 
  2025                      USD       Private     Senior       45.7        Other              infra           10.5 
 Scandlines Mezzanine 
  2032                      EUR       Private     HoldCo       43.6    Transport            Ferries            6.5 
 Bannister Senior 
  Secured                   GBP       Private     Senior       42.0      Accomm.        Health care            8.0 
 Adani Abbot HoldCo 
  2021                      AUD       Private     HoldCo       41.6    Transport               Port            9.3 
 Bizkaia TL 2021            EUR       Private     HoldCo       35.9        Power   Elec. generation            7.7 
 Aquaventure                USD       Private     Senior       34.3      Utility              Water            8.3 
                                                                                            Solar & 
 Project Warsaw             EUR       Private     Senior       31.3   Renewables               wind            5.9 
 Seaport TL B               USD       Private     Senior       30.4    Transport               Port            8.3 
                                                                                            Solar & 
 Sunrun Hera 2017-B         USD       Private       Mezz       30.1   Renewables               wind            8.2 
 Sacramento Data 
  Centre                    USD       Private     Senior       28.1          TMT       Data centers           10.0 
 Epic Midstream             USD       Private     Senior       27.2      Utility          Midstream            8.5 
 Abteen Ventures            USD       Private     Senior       26.9          TMT       Data centers            4.5 
 Ziton Senior                                                          Transport         Specialist 
  Secured 2021              EUR       Private     Senior       26.4       assets           Shipping            6.5 
 

Note (1) - excluding accrued interest

Market Summary

A total of 29 project finance transactions closed in January throughout the Company's eligible jurisdictions, worth $4.3bn in aggregate. Notable transactions during the month include:

   --      A EUR2.5bn refinancing of the LGV Tours-Bordeaux high speed rail line in France; 

-- A EUR493m financing for the Liege Tram PPP in Belgium, which will be 11.4km of tramline connecting Sclessin and Coronmeuse; and

-- A EUR150 million mezzanine loan for the EllaLink subsea cable project linking data centres in Brazil, Portugal, Spain, and France.

The US economy added 304,000 jobs in January 2019, with the unemployment rate slightly increasing to 4.0%. US GDP growth is expected to slow in 2019 to 2.3%, with continued pressure from tensions with China and the prolonged government shut down in December and January putting pressure on US economic growth. The Federal Reserve has indicated that it will put further rate rises on hold.

Eurozone economic growth has stagnated, with only 0.2% growth in Q4 2018 and concern that economic growth will slow further. Italy, the third-largest Eurozone economy, entered a recession, with its second consecutive quarter of economic contraction. Germany has also cut its projections for growth to 1.0% from 1.8%.

Amid Brexit fears and a global economic slowdown, UK economic growth has slowed as well, with only 0.2% growth in Q4 2018 and 1.4% growth for all of 2018, the slowest growth rate since 2012. The BoE has forecast growth for 2019 at 1.2%.

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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February 14, 2019 02:01 ET (07:01 GMT)