Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Dec 14, 2021

National Storage Mechanism | Additional information

RNS Number : 4961V

Sequoia Economic Infra Inc Fd Ld

14 December 2021

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

14th December 2021

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

NAV update

The NAV for SEQI, the specialist investor in economic infrastructure debt, decreased to 101.12 pence per share from the prior month's NAV of 101.72 pence per share, representing a decrease of 0.60 pence per share.

	pence per share
October NAV	101.72
Interest income, net of expenses	0.58
FX movements, net of hedges	-0.03
Decrease in asset valuations	-1.15
November NAV	101.12

Portfolio update

As of 30 November 2021, the Company had cash of £83.2m and had drawn £90.8m on its £325m revolving credit facility. The Company also had undrawn commitments on existing investments collectively valued at £24.1m. The Company's invested portfolio consisted of 64 private debt investments and 12 infrastructure bonds across 8 sectors and 30 sub‑sectors. It had an annualised yield‑to‑maturity (or yield‑to‑worst in the case of callable bonds) of 8.7% and a cash yield of 5.9%. The weighted average portfolio life is approximately 4.3 years. Private debt investments represented 95% of the total portfolio and 48% of the portfolio comprised floating rate assets. Investments which are pre‑operational represented 10% of total assets.

The Company's invested portfolio remains geographically diverse with 47% located across the US, 18% in the UK, 30% in Europe, and 5% 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 margin calls on its hedging book.

On the 12th of November 2021, the Company successfully completed the refinancing of its existing £325m Revolving Credit Facility to a new 3-year tenor £325m facility with an additional £75m Accordion facility. The new facility is sustainability linked with margin premiums or discounts linked to the ESG score of the SEQI investment portfolio as verified by an independent assurance process.

As described in the portfolio update sent to investors on the 22nd of November, Bulb Energy Ltd ("Bulb") entered into the Special Administration Regime ("SAR") on 24th November and its parent company, Simple Energy Ltd ("Simple") entered into normal administration on the same day. The primary objective of the SAR is to ensure continuity of energy supply to customers, and, in this regard, the Investment Adviser has been working openly and constructively with all stakeholders to ensure the best interests of customers, employees and creditors.

During the SAR, the fund is unable to enforce its senior security over the assets of Bulb (which more than cover the amount of the Company's loan) and the capital provided by the Government to Bulb, to cover ongoing operating losses and achieve the Government's wider policy objectives, will (at least in part) rank ahead of the Company's loan. The Government and the special administrators are yet to disclose whether they have a plan for Bulb's exit from the SAR and therefore it is not possible to assess the level of funding the Government will have provided by the end of the SAR. Consequently, the decision to put Bulb into the SAR means that the Investment Adviser is not currently able with confidence to ascribe any value to the assets of Bulb over which it has security and accordingly it is currently assuming that these will have no value at all after repayment of the Government's capital. The Investment Adviser notes that, had a Supplier of Last Resort process been adopted, it would have expected full repayment of its loan in a relatively timely manner. The Investment Adviser is working closely with advisers to understand if due process was followed in relation to the appointment of the Special Administrator and in ruling out a supplier of last resort arrangement among other matters.

As previously noted, the Company's loan to Bulb is guaranteed by, and secured on, the substantial assets of Simple which is outside the scope of the SAR. The Investment Adviser is actively involved in assessing the value of these assets, but in the meantime the loan has been marked at approximately 52p in the pound to reflect a valuation of Simple's assets alone which we and our independent reviewer believe to be conservative and realistic. The effect of this has been to reduce Net Assets Value by 1.59 pence per share. The Investment Adviser, supported by the Board, continues to be very actively focused on this loan, as well as on the two other underperforming assets, which include a loan to Australian potassium project, and a property tenanted by a private school in Washington DC. We will continue to update investors when appropriate.

The Company's settled investment activities during November include:

• An additional loan of £10.0m to Bannister, a care home provider based in the UK;

• A purchase for $8.3m of Windstream bonds, a high-speed broadband provider based in the US;

• An additional $4.0m loan to Sunrun Radcliffe, a manufacturer of solar energy equipment based in the US;

• An additional £1.2m loan to Clyde Street Facility B, a newbuild hotel in Glasgow, UK; and

• An additional $0.9m disbursement to Lanthanum, a leading developer of hyperscale data centres in Virginia, US.

The following assets sold or prepaid in November:

• A $38.8m Primary loan to Seaport, a US‑based shipping port; and

• A partial sale of £1.2m of Voyage Care 2023 bonds, a UK-based care home provider for people with disabilities.

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	67.2	Transport assets	Rolling stock	1.28	5.11
Bannister Senior Secured	GBP	Private	Senior	65.2	Accommodation	Health care	6.65	6.90
Infinis Energy	GBP	Private	Senior	65.0	Renewables	Landfill Gas	5.00	5.00
AP Wireless Junior	EUR	Private	Mezz	60.7	TMT	Telecom Towers	4.22	6.13
Hawaiki Mezzanine Loan	USD	Private	Mezz	57.5	TMT	Undersea cable	8.34	9.06
Hawkeye Solar HoldCo	USD	Private	HoldCo	56.0	Renewables	Solar & wind	8.05	7.84
Tracy Hills TL 2025	USD	Private	Senior	55.6	Other	Residential infra	8.08	8.08
Brightline	USD	Private	Senior	52.8	Transport	Rail	8.00	8.00
AP Wireless US HoldCo	USD	Private	HoldCo	52.2	TMT	Telecom Towers	6.00	6.00
Expedient Data Centres	USD	Private	Senior	49.0	TMT	Data centers	5.50	5.50
Project Nimble	EUR	Private	HoldCo	46.9	TMT	Data centers	8.05	8.04
Sacramento Data Centre	USD	Private	Senior	45.9	TMT	Data centers	7.00	7.00
Scandlines Mezzanine	EUR	Private	HoldCo	44.9	Transport	Ferries	0.00	9.23
Euroports 2nd Lien 2026	EUR	Private	Mezz	43.4	Transport	Port	7.77	7.70
Care4U Senior Secured	EUR	Private	Senior	43.2	Accommodation	Health care	6.00	6.00

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

Sanne Fund Services Guernsey 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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