Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Dec 13, 2019

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RNS Number : 7429W

Sequoia Economic Infra Inc Fd Ld

13 December 2019

13 December 2019

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 29 November 2019 and Investment Update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 104.87p from the prior month's NAV of 104.08p per share. The changes in NAV arose primarily through:

·      Interest income net of expenses of 0.65p;

·      An increase of 0.16p in asset valuations; and

·      Unhedged FX losses of 0.02p.

As at 29 November 2019, the Company had cash of £38.5m and was fully drawn on its £200m Revolving Credit Facility. The Company also had undrawn commitments on existing investments collectively valued at £41.1m.

In light of the Company's increased scale, its deployment level and its pipeline of opportunities, the Board intends to increase the size of the RCF in the near future by entering into a £80 million incremental facility tranche, resulting in a total capacity of £280 million under the RCF. The lending group remains unchanged.

The Company's invested portfolio comprised of 68 private debt investments and 13 infrastructure bonds across 8 sectors and 32 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.2% and a weighted average life of approximately 4.1 years. Private debt investments represented 92% of the total portfolio and 72% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 94.9% of par. Investments which are pre-operational represented 13.7% of total assets.

The Company's invested portfolio remains geographically diverse with 47% located across the US, 19% in the UK, 28% 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 100% 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 November include:

·      A €68.0m primary loan to AP Wireless, a worldwide leading cell site lease investment firm;

·      A $50.0m primary loan to Corral Petroleum Holdings, a Swedish refiner and distributor of oil and petroleum products. Corral is the first refiner in Sweden to produce renewable fuels and has become a strategic asset for Sweden as they look to convert 50% more of its transport fuels to renewables-based fuels by 2030;

·      A £20.0m primary loan to Atlas Smart Metering, an independent UK smart-meter provider;

·      A €14.75m secondary acquisition of American Tanker Inc's 9.25% 2022 bonds, which are backed by a ship finance company focused on the intercoastal U.S. Jones Act shipping market; and

·      An additional €12.5m secondary acquisition of term loans to Warnow Tunnel, a tolled tunnel in Rostock, Germany.

The following investments were sold in November:

·      £15.0m of National Grid's variable rate 2073 bonds;

·      £15.0m of Electricite de France's variable rate 2029 bonds;

·      £6.0m of Euro Garages TL B; and

·      $3.4m of Teekay Shuttle Tankers' 7.125% 2022 bonds.

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
AP Wireless Junior	EUR	Private	Mezz	57.9	TMT	Telecom towers	6.2
Hawaiki Mezzanine Loan	USD	Private	Mezz	57.4	TMT	Undersea cable	11.7
Salt Creek Midstream	USD	Private	Senior	53.4	Utility	Midstream	7.6
Tracy Hills TL 2025	USD	Private	Senior	45.4	Other	Residential infra	9.7
Scandlines Mezzanine 2032	EUR	Private	HoldCo	44.2	Transport	Ferries	5.9
Euroports 2nd Lien 2026	EUR	Private	Mezz	42.6	Transport	Port	7.7
Bannister Senior Secured	GBP	Private	Senior	41.2	Accomm.	Health care	8.4
Adani Abbot HoldCo 2021	AUD	Private	HoldCo	39.2	Transport	Port	9.3
Kaveh Senior Secured TL 2021	USD	Private	Senior	38.7	TMT	Data centers	7.5
Corral HoldCo 2024	USD	Private	HoldCo	38.7	Other	Refinery	9.2
Whittle Schools B	USD	Private	Senior	38.5	Other	Private schools	10.8
Nasco Senior Secured 2020	USD	Private	Senior	38.2	Other	Industrial infra	5.6
Bizkaia TL 2021	EUR	Private	HoldCo	36.4	Power	Elec. generation	7.7
Warnow Tunnel	EUR	Private	Senior	35.7	Transport	Road	6.7
Bulb Senior TL 2021	GBP	Private	Senior	35.0	Utility	Electricity supply	7.1

Note (1) - excluding accrued interest

Market Summary

A total of 45 project finance transactions closed in November throughout the Company's eligible jurisdictions, worth $8.65n in aggregate. Notable transactions outside of the Company's investment activities during the month include:

·      €59.5m financing of the 108.5MW Solaria Energia solar PV portfolio in Spain;

·      A $314m acquisition facility for the Choctaw Energy Gas-Fired power plant in Mississippi, USA; and

·      A £1.1bn financing of the Silvertown Tunnel in London, UK.

In October, the US economy added 266,000 new jobs, with the unemployment rate back down to 3.5%. Q3 2019 GDP growth was estimated at 2.1% for the quarter.

The Eurozone economy grew 0.3% across the 28 member states in Q3 2019, with Germany and Italy still at 0.1% growth for the quarter.

The UK economy also remains weak, with 0% estimated growth in October 2019 and estimates of continued minimal growth for the rest of 2019.

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

Mark Bloomfield

Alex Miller

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.

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