Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Feb 12, 2021

National Storage Mechanism | Additional information

RNS Number : 8755O

Sequoia Economic Infra Inc Fd Ld

12 February 2021

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES

12 February 2021

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 101.23 pence per share from the prior month's NAV of 100.09 pence per share (being the 31 December 2020 cum-income NAV of 101.65 pence less the dividend of 1.5625 pence per share declared in respect of the quarter ended 31 December 2020), representing an increase of 1.14 pence per share.

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

	pence per share
December NAV	101.65
Dividend declared for quarter ending 31 December 2020	-1.56
Adjusted opening NAV	100.09
Interest income, net of expenses	0.59
FX movements, net of hedges	0.02
Increase in asset valuations	0.53
January NAV	101.23

Update on the effects of COVID-19 on the Portfolio

Since 31 March 2020, being the date of the Company's last annual results, the Company has continued to perform in line with expectations and the portfolio has seen a strong recovery since various loans were marked down at the onset of the March 2020 sell off. During this period, the NAV total return was 11.2%. This was driven in part by credit spreads tightening, which contributed about 5.16 pence per share to the NAV over that period. The Company's strongest performing sub-sectors have been data centres and telecom towers which have delivered returns of 9.5% and 11.6% respectively since 31 March 2020.

Further Portfolio update

The Company's invested portfolio comprised of 64 private debt investments and 11 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 8.8% and a cash yield of 5.6%. Based on the Investment Adviser's analysis of our current portfolio our annual dividend remains fully cash covered, net of all expenses. While the events of 2020 saw the current level of loans not paying cash interest ("PIK loans") rise to 20.7% currently from a typical range of 10 - 15% (consisting mainly of loans to assets in construction), the Investment Adviser expects the number of PIK loans to decrease throughout 2021, increasing dividend cash cover and capturing increased economics from the PIK terms. Moreover, some interest income which fell to be reported as PIK income has subsequently been received in cash, albeit sometime after the due date.

The weighted average portfolio life is approximately 4.4 years. Private debt investments represented 95% of the total portfolio and 61% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 97.4% of par. Investments which are pre-operational represented 8.1% of total assets.

As at 29 January 2021, SEQI had cash of £114.8m and had drawn £209m on its £280m Revolving Credit Facility. The Company also had undrawn commitments on existing investments collectively valued at £127.8m.

The Company continues to see a strong pipeline of economic infrastructure opportunities globally, with a near term pipeline of opportunities under review in excess of £500m. These opportunities are both geographically diverse and include potential investment opportunities in data centres, electricity generation and supply and renewable energy. This pipeline of investments continues to strengthen the ESG credentials of the Company's portfolio.

In light of the Company's current level of gearing and the opportunities available to it, the Company is considering raising further equity to repay drawings under its revolving credit facility. If the Board resolves to proceed with an equity raise, any issue of shares will be at a price per share that is accretive to NAV. Any equity issue would likely be undertaken under the Company's general authority to issue up to 10% of its shares in issue on a non-pre-emptive basis, as approved by shareholders at its 2020 Annual General Meeting.

At month end, approximately 97.0% 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 January include:

·      A £65.0m loan to Infinis Energy Management, the UK's leading generator of low-carbon power from captured methane;

·      An additional $1.1m disbursement to Sunrun Radcliffe, a leader in the US residential solar market; and

·      An additional $0.4m disbursement to Bourzou Equity, a company created for a data centre in Virginia.

None of the Company's investments were sold or prepaid in January.

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Cash-on-cash yield (%)	Yield to maturity / worst (%)
Madrid Metro	EUR	Private	HoldCo	67.5	Transport assets	Rolling stock	1.30	5.40
Infinis Energy Management	GBP	Private	Senior	65.0	Renewables	Landfill gas	5.00	5.00
AP Wireless Junior	EUR	Private	Mezz	61.7	TMT	Telecom towers	4.25	6.25
Tracy Hills TL 2025	USD	Private	Senior	55.9	Other	Residential infra	8.12	8.12
Hawaiki Mezzanine Loan	USD	Private	Mezz	54.8	TMT	Undersea cable	8.54	9.56
Warnow Tunnel	EUR	Private	Senior	51.9	Transport	Road	1.37	3.21
Expedient Data Centers	USD	Private	Senior	46.9	TMT	Data centers	5.68	5.85
Euroports 2nd Lien 2026	EUR	Private	Mezz	44.9	Transport	Port	7.79	7.85
Care4U Senior Secured	EUR	Private	Senior	44.8	Accom.	Health care	6.00	6.00
Scandlines Mezzanine	EUR	Private	HoldCo	43.7	Transport	Ferries	0.00	9.13
Adani Abbot HoldCo 2021	AUD	Private	HoldCo	41.6	Transport	Port	5.76	17.61
Bannister Senior Secured	GBP	Private	Senior	41.6	Accom.	Health care	6.54	6.74
Hawkeye Solar HoldCo	USD	Private	HoldCo	39.8	Renewables	Solar & wind	8.26	8.26
Jetpeaks HoldCo 2027	USD	Private	HoldCo	38.5	Power	Electricity generation	7.48	8.02
Ziton Senior Secured 2022	EUR	Private	Senior	38.2	Transport assets	Specialist shipping	7.79	15.61

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

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America.  This announcement is not an offer of securities for sale into the United States.  The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration.  No public offering of securities is being made in the United States.

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

Laura Marshall

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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