Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Aug 12, 2016

National Storage Mechanism | Additional information

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RNS Number : 9862G

Sequoia Economic Infra Inc Fd Ld

12 August 2016

12 August 2016

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 29 July 2016 and Investment Update

Ordinary Share update

As of the 29th July 2016, the Ordinary Share class held 12 infrastructure bonds and 17 private debt investments, collectively valued at £296.5m 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 5.3 years.

Approximately half of the Ordinary Share class portfolio comprised of 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 if 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.

In July, the Company sold its positions in Enable Midstream Partners 2019, Enable Midstream Partners 2024 and Columbia Pipeline Gas 2045 bonds at a significant premium which can be attributed to improving company performance and rallying oil prices. These resulted in holding period returns of approximately 38%, 24% and 41% respectively. The Enable positions were held for c. 5 months, and the Columbia bonds were held for c. 4 months.

The Ordinary Share NAV fell to 100.78 (ex-div) from 101.16p per share, primarily through:  

·       Interest income net of expenses of 0.36p;

·       A gain of 0.59p on net FX movements;

·       A gain of 0.18p in asset valuations; and

·       A dividend declaration of 1.50p.

Ordinary Portfolio Summary (10 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	31.1	Transport	Road	5.52
Infinis Bridge	GBP	Private	HoldCo	23.8	Renewables	Solar & Wind	11.74
Exeltium Mezzanine	EUR	Private	Mezz	18.9	Power	PPA	9.15
Danaos Snr Secured 2018	USD	Private	Senior	17.9	Transport assets	Shipping	12.96
Neoen Production 1 S.A.S.U	EUR	Private	HoldCo	16.5	Renewables	Solar & Wind	6.99
IO Data Centers LLC	USD	Private	Senior	15.0	TMT	Data Centres	8.16
Biffa TL A	GBP	Private	Senior	12.9	Utility	Waste	6.93
GFL 9.875% 2021	USD	Public	Senior	12.3	Utility	Waste	7.16
Green Plains TL B	USD	Private	Senior	10.8	Other	Alternative Fuel	8.39
Reliance Rail Finance 2018	AUD	Private	Senior	10.6	Transport assets	Rolling Stock	6.84

Note (1) - excluding accrued interest

C Share update

As of the 29th July 2016, the C Share class held 2 infrastructure bonds and 4 private debt investments. These assets are collectively valued at £68.1m including accrued interest, with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 7.7% and a weighted average life across the acquired portfolio of approximately 4.1 years.

Investments in July include:

·       Longview Power Term Loan B, a US electricity generation company

·       A senior loan to AP Wireless Infrastructure, a cell site lease investment firm

·       An incremental investment in Talen Energy Supply, a US power and electricity generation company

In addition, the C Share class had one bond and one private debt position in the process of settlement, with an aggregate value of £27.0m.

The Investment Adviser continues to see attractive opportunities for the deployment of capital into economic infrastructure debt, and expects the overall yield on the C Share portfolio to be 8% or higher as the fund becomes more fully invested.

The C Share NAV rose from 98.12 to 98.58p, primarily through:

·       A gain of 0.09p on net FX movements;

·       A 0.29p gain from market movements; and

·       Interest income net of expenses of 0.08p.

Market Summary

July saw little activity in the sector, with only two infrastructure projects reaching financial close across the UK and Western Europe. This comprised the £340m financing of the 43MW Kemsley EfW CHP plant in Kent, UK. In addition, the Dalaman airport reached financial close on a €232mm facility which will be used for privatisation.

The Bank of England announced their willingness to further loosen monetary policy in an effort to mitigate the impact of Brexit on the British economy.

Eurozone unemployment beat expectations with German unemployment falling and Spanish unemployment achieving a 17-year low.

In July, Sterling's fall from Brexit against the US Dollar was mitigated by the Fed leaving rates unchanged, resulting in Sterling ending the month at $1.32.

Additionally, Sterling remained flat against the Euro, ending the month at €1.19.

Over the month, the Bloomberg USD High Yield Corporate Bond Index rose from 159 to 162.

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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