Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Dec 14, 2016

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RNS Number : 7631R

Sequoia Economic Infra Inc Fd Ld

14 December 2016

14 December 2016

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 30 November 2016 and Investment Update

Ordinary Share update

As of the 30th November 2016, the Company held 26 private debt investments and 13 infrastructure bonds for a total of 39 investments across 8 sectors and 21 subsectors, which are collectively valued at £466.6m including accrued interest, with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.2% and a weighted average life across the acquired portfolio of approximately 4.6 years.

Approximately 50% of the Ordinary Share portfolio comprises floating rate assets, with only two LIBOR floors above current LIBOR levels (of which one is Sterling and the other is Euros). As such, the portfolio's yield is likely to rise over time as LIBOR increases.

The investments are 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 and ship leasing.

Over the month of November, the Company acquired four new assets, one of which includes debt issued by Heathrow Finance Plc, further increasing portfolio diversification as the first airport asset. The other investments made during the month of November include:

·       Bonds issued by a UK-based electricity transmission company that owns and operates high voltage transmission networks in England and Wales;

·       An incremental investment in the A65 toll road in France which has significantly outperformed its 2016 traffic projections.

The Company sold its position in First Energy Solutions for the purpose of risk management.

Sterling strengthened against both of the dollar and the euro during the month of November, however the Investment Adviser remains committed to reducing NAV volatility arising from FX movements by maintaining its hedging strategy. As of the 30th November 2016, approximately 82% of NAV was either Sterling assets or hedged into Sterling, which is a slight increase from 80% three months prior.

The Company has more than adequate resources to cover the cash costs associated with its hedging book. Each of its FX hedge providers has credit lines to the Company which means that the margin calls on the hedge portfolio have been modest.

The decrease in the Ordinary Share NAV to 101.36p from 102.00p per share arose primarily through:

·       Interest income net of expenses of 0.38p;

·       A decrease of 0.47p in asset valuations; and

·       A decrease of 0.56p in FX movements.

Placing Programme Result

The Company is pleased to confirm that the Ordinary Share placing programme announced on the 26th October 2016 was significantly oversubscribed. 

Following Admission on 7th December 2016 a total of 120 million new Ordinary Shares were issued at a price of 105p per share, the Company will have 595,412,613 Ordinary Shares in issue.

Ordinary 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	37.0	Transport	Road	3.32
AP Wireless Infrastructure	GBP	Private	Senior	30.0	TMT	Towers	6.81
IO Data Centers LLC	USD	Private	Senior	30.0	TMT	Data Centers	9.00
Infinis Bridge	GBP	Private	HoldCo	24.0	Renewables	Solar & Wind	10.00
Regard Group Mezzanine	GBP	Private	Mezz	22.6	Accommodation	Health Care	12.03
Natgasoline Senior Unsecured	USD	Private	Mezz	20.0	Other	Industrial Infrastructure	9.78
Exeltium Mezzanine	EUR	Private	Mezz	18.9	Power	PPA	9.14
Danaos Snr Secured 2018	USD	Private	Senior	17.6	Transport assets	Shipping	16.77
Neoen Production	EUR	Private	HoldCo	16.5	Renewables	Solar & Wind	6.99
Mount Signal Solar	USD	Private	Senior	16.0	Renewables	Solar & Wind	8.49
Longview Power TL B	USD	Private	Senior	13.6	Power	Electricity Generation	10.55
GFL 9.875% 2021	USD	Public	Senior	13.0	Utility	Waste	6.34
Talen Energy Supply 4.6% 2021	USD	Public	Senior	13.0	Power	Electricity Generation	8.99
Heathrow Finance PLC	GBP	Public	Senior	11.4	Transport	Airport	4.30
Green Plains TL B	USD	Public	Senior	11.2	Other	Alternative Fuel	7.00

Note (1) - excluding accrued interest

Market Summary

November displayed less activity in the infrastructure debt sector, with only 6 European project finance transactions reaching financial close across the month.

Notable transactions include the partly subsidised €900mm Nord-Pas-de-Calais broadband PPP financing for fibre optic in France. In addition, several small renewables deals closed throughout Europe, including the 30.8MW SunPort Delfzijl Solar Park in the Netherlands and the 33.1MW Castlepook Wind Farm in Ireland.

News flow in November was initially dominated by the election of Donald Trump as the 45th President of the United States, which increased yields on sovereign bonds and heightened uncertainty around global trade.

November news flow ended with RBS emerging as the biggest failure in the UK bank stress tests, and the struggling Italian bank MPS awaiting the reform referendum in early December.

During November, Sterling recovered against both the dollar and euro, ending the month at $1.25 and €1.18 respectively. The Bloomberg USD High Yield Corporate Bond Index remained flat at 167.

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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