Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Sep 12, 2019

National Storage Mechanism | Additional information

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RNS Number : 0397M

Sequoia Economic Infra Inc Fd Ld

12 September 2019

12 September 2019

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 30 August 2019 and Investment Update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 104.62p from the prior month's NAV of 104.03p per share. The changes in NAV arose primarily through:

·      Interest income net of expenses of 0.64p;

·      An increase of 0.01p in asset valuations; and

·      Unhedged FX losses of 0.06p.

As at 30 August 2019, the Company had cash of £46.5m and outstanding drawings on its Revolving Credit Facility of £161.7m. The Company also had undrawn commitments, and one additional investment in settlement, collectively valued at £83.1m.

The Company's invested portfolio comprised 63 private debt investments and 16 infrastructure bonds across 8 sectors and 29 sub-sectors and had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.3% and a weighted average life of approximately 4.3 years. Private debt investments represented 88.2% of the total portfolio and 69.5% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 95.4% of par. Investments which are pre-operational represented 16.0% of total assets.

The Company's invested portfolio remains geographically diverse with 46% located across the US, 16% in the UK, 31% in Europe, and 8% 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 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 August include:

·      A $40m primary loan to Heritage Power, a holding company that owns a portfolio of 16 power plants located across Pennsylvania, Ohio, and New Jersey;

·      A $30m primary loan to Prometheus Energy, a leading independent fuel distributor and convenience store retailer in the US;

·      A €25m primary loan to Swissport, the world's leading independent ground and cargo handling service provider to the aviation industry;

·      A £16.5m primary loan to Nottingham Student Housing, a 229-unit purpose-built student accommodation development in Nottingham, UK;

·      A $10m secondary bond purchase of GE's 5% perpetual bonds, an equipment manufacturer that is shifting its focus to the power, renewables, and aviation sectors;

·      A €2m secondary bond purchase of Naviera Armas SA's variable rate 2023 bonds backed by a fleet of twenty-three ferries which provide passenger and freight maritime transportation services in Spain;

·      An additional €541k disbursement to Hatch Student Housing in Cork, Ireland.

The following investments were sold or called/repaid in August in line with expectations:

·      $22.5m of Sunrun Scorpio's TL A and B loans back of a residential solar portfolio; and

·      £550k of Heathrow Airport's 5.75% 2025 bonds.

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
Hawaiki Mezzanine Loan	USD	Private	Mezz	61.0	TMT	Undersea cable	11.6
Salt Creek Midstream	USD	Private	Senior	56.7	Utility	Midstream	8.3
Tracy Hills TL 2025	USD	Private	Senior	49.3	Other	Residential infra	10.2
Scandlines Mezzanine 2032	EUR	Private	HoldCo	47.2	Transport	Ferries	5.8
Euroports 2nd Lien 2026	EUR	Private	Mezz	45.1	Transport	Port	7.8
Adani Abbot HoldCo 2021	AUD	Private	HoldCo	41.5	Transport	Port	8.9
Bannister Senior Secured	GBP	Private	Senior	41.2	Accomm.	Health care	8.4
Kaveh Senior Secured TL 2021	USD	Private	Senior	41.1	TMT	Data centers	7.9
Whittle Schools B	USD	Private	Senior	40.9	Other	Private schools	11.1
Bizkaia TL 2021	EUR	Private	HoldCo	38.6	Power	Electricity gen.	7.7
Aquaventure	USD	Private	Senior	37.0	Utility	Water	8.1
Bulb Senior TL 2021	GBP	Private	Senior	35.0	Utility	Electricity supply	7.2
Sunrun Hera 2017-B	USD	Private	Mezz	32.4	Renewables	Solar & wind	7.8
Project Warsaw Senior	EUR	Private	Senior	32.4	Renewables	Solar & wind	5.9
Heritage Power	USD	Private	Senior	32.3	Power	Electricity gen.	8.5

Note (1) - excluding accrued interest

Market Summary

A total of 51 project finance transactions closed in August throughout the Company's eligible jurisdictions, worth $7.4bn in aggregate. Notable transactions outside of the Company's investment activities during the month include:

·      A $1.30bn financing of the 1,863MW CCGT plant in Guernsey, Ohio;

·      A €434m financing of the development of an 864MW solar PV portfolio in Spain; and

·      A CAD $699m financing for the development of an acute care hospital in Corner Brook, Newfoundland and Labrador, Canada.

The US manufacturing sector contracted in August, likely in response to tariffs imposed on US imports by the Chinese government.  In August, the US economy added 130,000 jobs, below expectations for 158,000, likely weighed down by fears over tariffs. Unemployment remains at 3.7%.

Eurozone economic growth is expected to be just 1.0% for all of 2019, although growth rates vary across the continent, with Spain expected to have 2.0% growth for the year and Germany less than 0.5%.

The UK economy is struggling amid Brexit uncertainty and is at risk of moving into a recession, with Q3 2019 expected to be the second straight quarter of contracted growth.

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                              +44 (0)20 7079 0480

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Greg Taylor

Stifel Nicolaus Europe Limited                                                       +44 (0)20 7710 7600

Neil Winward

Mark Bloomfield

Gaudi Le Roux

Tulchan Communications (Financial PR)                                    +44 (0)20 7353 4200

James Macey White

Martin Pengelley

Elizabeth Snow   

Praxis Fund Services Limited (Company Secretary)               +44 (0) 1481 755530

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 rns@lseg.com or visit www.rns.com.

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