Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Mar 14, 2016

National Storage Mechanism | Additional information

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RNS Number : 9182R

Sequoia Economic Infra Inc Fd Ld

14 March 2016

14 March 2016

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 29 February 2016 and Investment Update

Company update

As of the 29th February 2016, the Company held 19 infrastructure bonds and 19 private debt investments, collectively valued at £277.6m including accrued interest, with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.6% and a weighted average life across the acquired portfolio of approximately 5.5 years.

Approximately 55% of the Company portfolio comprises floating rate assets, with only four LIBOR floors (other than those at zero percent). As such the portfolio's yield is likely to increase over time as LIBOR increases.

The investments are diverse across the UK, Western Europe, Australia, Canada and the US and include a wide range of asset types including road, rail, utility, power, shipping, renewables and aircraft leasing.

Investments in February include:

· Allegheny Energy Supply, a US electricity distribution company;

· DBB Jack-up Services A/S, an offshore wind maintenance service provider;

· MPLX, a US pipeline company.

The Investment Adviser continues to see attractive opportunities for the deployment of capital in the economic infrastructure debt sector, and expects the overall yield on the portfolio to remain 8% or higher. Specific opportunities currently being pursued include private debt backed by light rail, aircraft leasing, and power; plus bond opportunities in the pipeline sector and electricity generation. In addition, the investment advisor has taken advantage of the softness in the credit markets to improve the portfolio's average credit quality without reducing its average yield, and the investment advisor expects this strategy to continue into March.

C Share conversion

As announced on the 3rd February 2016, the C Share register closed at 5.30pm on the 2nd March 2016, after which the C Shares converted into new Ordinary Shares and dealings in these new Ordinary Shares commenced on the 3rd March 2016. The conversion ratio was 1.0375 Ordinary Shares for every one C Share, resulting in the issuance of 152,395,794 new ordinary shares. Based on the closing share price on the 3rd March of 104.0p, the total return for investors in the C Share from launch was a gain of 7.9p per share, equivalent to an IRR of 25%. Benefits of the conversion to shareholders include a reduction in the ongoing costs of the Company, an increase in the diversification of the portfolio and an increase in the range of potential investment ticket size.

Company NAV performance

The increase in Company NAV to 97.04p per share arose primarily through:

· Interest income net of expenses of 0.4p;

· A gain of 0.9p on net FX movements; and

· A decline of 0.6p in asset valuations;

Portfolio Summary (15 largest settled investments)

Transaction name	Currency	Type	Ranking	Value £mm (1)	Sector	Sub-sector	Yield to maturity / worst (%)
A'lienor S.A.S. (A65)	EUR	Private	Senior	28.3	Transport	Road	5.44
Infinis Bridge	GBP	Private	HoldCo	24.0	Renewables	Solar & Wind	8.82
Danaos Snr Secured 2018	USD	Private	Senior	18.7	Transport assets	Shipping	8.13
Exeltium Mezzanine	EUR	Private	Mezz	18.0	Power	PPA	8.60
Neoen Production 1 S.A.S.U	EUR	Private	HoldCo	15.2	Renewables	Solar & Wind	7.00
Biffa TL A	GBP	Private	Senior	12.9	Utility	Waste	6.85
Dulles Greenway 2029	USD	Public	Senior	9.2	Transport	Road	6.44
North Las Vegas Water 6.572% 2040	USD	Public	Senior	8.3	Utility	Water	6.99
Reliance Rail Finance 2018	AUD	Private	Senior	8.1	Transport assets	Rolling Stock	6.37
Invenergy TL B	USD	Private	Senior	7.2	Power	Electricity Generation	6.20
Green Plains TL B	USD	Private	Senior	7.0	Other	Alternative fuel	6.87
Castlelake 2015-1 C	USD	Public	Mezz	6.8	Transport assets	Aircraft	10.05
Care UK L+ 500	GBP	Public	Senior	6.7	Accommodation	Elderly Care	10.62
NRG Energy Inc 7.785% 2021	USD	Public	Senior	6.7	Power	Elec Generation	9.57
Castlelake 2014-1 B	USD	Private	Mezz	6.7	Transport assets	Aircraft	7.79

Note (1) - excluding accrued interest

Market Summary

February showed some activity in the infrastructure debt sector with 7 transactions closing across the UK and Western Europe. Notable deals included the £182m primary financing of the Westermost Rough UK offshore wind transmission links, as well as the €200m bridge loan refinancing for the Pedemontana Lombarda Highway in Italy. 

Opportunities in selected markets remained strong with US spread widening providing scope to improve credit quality and shorten duration. The emergence of new asset classes over the longer term, such as broadband and electricity storage, are creating new demand for infrastructure financing. 

Sterling fell further during the month from $1.42 to $1.39 against the US dollar and weakened slightly against the euro, with one euro worth £0.78 at the end of February, compared with £0.76 at the end of January.

Equity markets were volatile during February, with the VIX hitting a 5-month high during the month. The company's shares remained stable by comparison, reflecting the more predictable nature of debt cash flows from a diverse portfolio that benefits from equity cushion at the asset level. 

The Bloomberg USD High Yield Corporate Bond Index increased slightly to 143 from 142.  As part of a "flight to quality", 10-year US Treasury yields fell by 19 bps from 1.92% to 1.73%.

The Company's monthly investor report and additional portfolio disclosure will be made available at http://www.seqifund.com/.

Sequoia Investment Management Company

Randall Sandstrom / Steve Cook                         Telephone 020 7079 0483 / 020 7079 0481

Stifel Nicolaus Europe Limited

Neil Winward / Mark Bloomfield / Gaudi Le Roux              Telephone 020 7710 7600

International Fund Management Limited

Chris Hickling                                                                Telephone 01481 737600

About Sequoia Economic Infrastructure Income Fund Limited

The Company is a Guernsey registered closed-ended investment company that 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.  The Company has been advised that the Shares can be considered as "excluded securities" for the purposes of the FCA rules regarding the definition and promotion of Non-Mainstream Pooled Investments (NMPIs).

This information is provided by RNS

The company news service from the London Stock Exchange

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