Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Jun 12, 2020

National Storage Mechanism | Additional information

RNS Number : 7351P

Sequoia Economic Infra Inc Fd Ld

12 June 2020

12 June 2020

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 98.21 pence per share from the prior month's NAV of 96.80 pence per share, representing an increase of 1.41 pence per share.

The gain in asset valuations can be attributed primarily to spread tightening of comparable investments across the portfolio and continued positive credit developments in the wake of the ongoing COVID-19 pandemic.

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

	pence per share
April NAV	96.80
Interest income, net of expenses	0.65
FX movements, net of hedges	0.16
Increase in asset valuations	0.60
May NAV	98.21

Update on the effects of COVID-19 on the Portfolio

The Investment Adviser, the Investment Manager, and PWC as independent valuation agent have continued analysing the effect of COVID-19 on the Company's portfolio which also includes a market benchmarking exercise to conclude on spread and yield adjustments for each of the investments in the portfolio. In doing so, the team also considered asset-specific characteristics that would mitigate or exacerbate the issues caused by the global pandemic and sustained low oil prices.

In summary, the spread widening across the portfolio during the second half of March 2020 continued its reversal throughout May, with a number of the Company's investments performing better than expectations throughout the lockdown. The spread tightening seen in the markets and the broader credit outperformance both contributed to the market movements gain of 0.60 pence per share.

In terms of the previous investments that have been significantly marked down as a result of the ongoing pandemic and continued weakness in oil prices, there has been some recovery in valuations since March. The only notable update on these assets is the restructuring process of the US midstream business which is still ongoing.

Further Portfolio update

As of 29 May 2020, the Company's invested portfolio comprised of 60 private debt investments and 12 infrastructure bonds across 8 sectors and 28 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 11.4% and a weighted average life of approximately 5.6 years. Private debt investments represented 94% of the total portfolio and 66% 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 11.7% of total assets.

The Company's invested portfolio remains geographically diverse with 52% located across the US, 15% in the UK, 27% 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 98.5% 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 May include:

·      An additional $10.0m 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;

·      An additional £9.9m secondary acquisition of Voyage Care 5.875% 2023 bonds; a leading care provider for patients with complex health needs in the UK;

·      An additional $1.0m disbursement to Bourzou Equity, a company created for the construction of a data centre in Virginia;

·      An additional €0.7m disbursement to Project Swordfish, a company that operates waterbus passenger transport systems in Antwerp, Belgium; and

·      An additional €0.3m secondary acquisition of Ziton, an offshore wind turbine maintenance company located in Denmark.

The following Company's investments were sold in May:

·      €25m of Swissport's 2024 senior secured bonds, an independent ground and cargo handling service provider to the aviation industry.

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	61.6	TMT	Telecom towers	6.3
Hawaiki Mezzanine Loan	USD	Private	Mezz	54.7	TMT	Undersea cable	15.0
Expedient Data Centers Senior Secured 2026	USD	Private	Senior	51.4	TMT	Data centers	7.0
Terra-Gen Power TL B	USD	Private	Senior	45.7	Renewables	Solar & wind	9.4
Hawkeye Solar HoldCo 2030 1, 2, and 3	USD	Private	HoldCo	43.8	Renewables	Solar & wind	8.2
Jetpeaks HoldCo 2027	USD	Private	HoldCo	43.8	Power	Elec. generation	7.6
Tracy Hills TL 2025	USD	Private	Senior	43.5	Other	Residential infra	9.3
Euroports 2nd Lien 2026	EUR	Private	Mezz	41.2	Transport	Port	9.6
Bannister Senior Secured	GBP	Private	Senior	40.7	Accomm.	Health care	8.8
Bizkaia TL 2021	EUR	Private	HoldCo	39.6	Power	Elec. generation	8.8
Adani Abbot HoldCo 2021	AUD	Private	HoldCo	39.6	Transport	Port	12.7
Scandlines Mezzanine 2032	EUR	Private	HoldCo	39.2	Transport	Ferries	8.9
Corral HoldCo 2024	USD	Private	HoldCo	37.5	Other	Refinery	12.1
Whittle Schools B	USD	Private	Senior	37.3	Other	Private schools	15.5
Salt Creek Midstream	USD	Private	Senior	36.8	Utility	Midstream	29.2

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                              +44 (0)20 7079 0480

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Greg Taylor

Anurag Gupta

Jefferies International Limited                                                      +44 (0)20 7029 8000

Gaudi le Roux

Neil Winward

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

Martin Pengelley

Elizabeth Snow

Deborah Roney

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

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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