Sequoia Economic Infra Inc Fd Ld Net Asset Value(s) (9920H)

TIDMSEQI

RNS Number : 9920H

Sequoia Economic Infra Inc Fd Ld

14 June 2017

14 June 2017

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 31 May 2017 and Investment Update

Ordinary Share update

The Board is pleased that the Ordinary Share Issue announced on 3 May was significantly oversubscribed and investor demand for the Issue exceeded the maximum issue size of GBP160 million.

The Board determined to issue 151,658,768 new Ordinary Shares at the Issue Price of 105.5 pence. Accordingly, the gross proceeds of the Issue were approximately GBP160 million. The Investment Adviser continues to see significant opportunities in the infrastructure debt market.

The increase in SEQI's NAV to 101.22p per share from 101.07p per share on 28th April 2017 arose primarily through:

   --      Interest income net of expenses of 0.46p; 
   --      A decrease of 0.85p in asset valuations; 
   --      No effect from FX movements; 
   --      A gain of approximately 0.55p from the Ordinary Share Issue. 

During May, the Company had invested or committed to invest a total of GBP27.4 million which resulted in the total invested portfolio representing approximately 76.7% of the Company's NAV (including cash from the issue of new shares) as of the 31st May 2017. As of the 31st May 2017, the Company had gross leverage of GBP40 million which has been drawn and partially deployed, and represents approximately 5.3% of NAV.

The portfolio held 29 private debt investments and 15 infrastructure bonds for a total of 44 investments that covered 8 sectors and 24 subsectors, and are collectively valued at GBP570.0 million including accrued interest with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.5% and a weighted average life across the acquired portfolio of approximately 4.5 years.

The weighted average purchase price of the Company's acquired investments was approximately 96.4% of par, and of those, only 13% had some form of construction risk.

During May, Sterling fell slightly against the Euro and the Dollar, ending the month at EUR1.147 and $1.287 respectively, and the Bloomberg USD High Yield Corporate Bond Index rose to 178.8. As of the 31st May 2017, approximately 89% of 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. Each of its FX hedge providers has credit lines to the Company which means that the margin calls on the hedge portfolio have been modest.

Approximately 50% of the invested portfolio comprises floating rate assets, with only two LIBOR floor above current LIBOR levels (EUR). As such, the portfolio's yield is likely to rise over time as LIBOR increases.

The Company's investment activities during May include (traded but unsettled):

-- Primary participation of GBP10 million in the new issue of Heathrow Finance PLC 3.875% 2027 bond issue;

-- Primary participation of $7.5 million in the C notes of the new Apollo Aviation 2017-1 aircraft securitization deal; and

-- Sale of the underperforming Danaos Senior Secured 2018 loan in order to reduce portfolio risk.

Ordinary Portfolio Summary (15 largest settled investments)

 
 Transaction           Currency        Type    Ranking      Value          Sector        Sub-sector       Yield 
  name                                                    GBPm(1)                                            to 
                                                                                                       maturity 
                                                                                                        / worst 
                                                                                                            (%) 
 
 A'lienor 
  S.A.S. (A65)            EUR       Private     Senior       37.6       Transport              Road         3.4 
 AP Wireless 
  Infrastructure          GBP      Private      Senior       33.0             TMT            Towers         6.2 
                                                                                              Waste 
 Cory Environmental       GBP      Private      HoldCo       32.7       Utilities         to Energy         8.5 
 Beamish HoldCo                                                                              Health 
  2017                    GBP       Private     Senior       30.0   Accommodation              Care        10.3 
 IO Data Centers                                                                               Data 
  LLC                     USD       Private     Senior       29.1             TMT           Centers         9.0 
 Abteen Ventures                                                                               Data 
  LLC                     USD       Private     Senior       27.2             TMT           Centers         8.0 
 Regard Group                                                                                Health 
  Mezzanine               GBP       Private       Mezz       23.3   Accommodation              Care        12.1 
 Natgasoline                                                                             Industrial 
  Senior Unsecured        USD       Private       Mezz       20.4           Other    Infrastructure        10.0 
 Exeltium 
  Mezzanine               EUR       Private       Mezz       19.2           Power               PPA         9.4 
 Welcome Break                                                                             Motorway 
  No.1 Ltd                GBP       Private       Mezz       18.3       Transport          Services         8.3 
 NGG Finance                                                                            Electricity 
  5.625% 2073             GBP        Public       Mezz       16.9       Utilities      Distribution         3.8 
                                                                                              Solar 
 Neoen Production         EUR       Private     HoldCo       16.5      Renewables            & Wind         7.0 
 Cheniere 
  Corp Christi 
  7% 2024                 USD        Public     Senior       13.0       Transport             Ports         4.8 
 NRG Energy 
  Inc 7.25%                                                                             Electricity 
  2026                    USD        Public     Senior       12.7           Power        Generation         6.8 
 GFL 9.875% 
  2021                    USD        Public     Senior       12.7         Utility             Waste         3.4 
 

Note (1) - excluding accrued interest

Market Summary

A total of 24 project finance transactions closed in May throughout the Company's eligible jurisdictions, and worth, in aggregate, $12.5 billion. Notable transactions include the 200MW Borkum West II German Offshore Wind project which received EUR800 million of financing of which EUR591 million was debt, and the 600MW Carlsbad Gas-Fired Energy Centre, which is located in San Diego, California, and will replace an existing centre and is fully-contracted with a 20-year PPA with San Diego Gas & Electric.

Eurozone growth was strong in May, however inflation remains subdued and is believed to still require stimulus, according to Mario Draghi. While still dovish, ECB policymakers have noted that risks to the Eurozone's economic outlook are no longer predominantly negative.

The Federal Reserve signalled that a further increase in short-term rates is possible in June, and that reducing the size of its balance sheet will soon be a priority.

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

Sequoia Investment Management Company

Randall Sandstrom / Steve Cook Telephone [phone]

Stifel Nicolaus Europe Limited

   Neil Winward / Mark Bloomfield / Gaudi Le Roux              Telephone [phone] 

International Fund Management Limited

Chris Hickling Telephone [phone]

About Sequoia Economic Infrastructure Income Fund Limited

The Company is a Guernsey registered closed-ended investment company that 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. The Company has been advised that the Shares can be considered as "excluded securities" for the purposes of the FCA rules regarding the definition and promotion of Non-Mainstream Pooled Investments (NMPIs).

This information is provided by RNS

The company news service from the London Stock Exchange

END

NAVBLGDLUGBBGRX

(END) Dow Jones Newswires

June 14, 2017 02:00 ET (06:00 GMT)