Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Mar 14, 2017

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RNS Number : 3205Z

Sequoia Economic Infra Inc Fd Ld

14 March 2017

14 March 2017

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 28 February 2017 and Investment Update

Ordinary Share update

During February, the Company had invested or committed to invest a total of £3.9m which resulted in the total invested portfolio representing approximately 89% of the Company's NAV as of the 28th February 2017.

The portfolio held 28 private debt investments and 13 infrastructure bonds for a total of 41 investments that covered 8 sectors and 23 subsectors, and are collectively valued at £543.4m including accrued interest with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 7.9% and a weighted average life across the acquired portfolio of approximately 4.3 years.

As of the 28th February 2017, the Company had gross leverage of £40m which represents approximately 6.5% of NAV. In the three months following the December Placing, the Company has deployed £103m, or 82%, of the £126m gross proceeds raised. The Company remains confident in its ability to deploy the remaining proceeds of the equity raise into its attractive pipeline of opportunities.

Approximately 40% of the portfolio (invested assets plus cash) comprises floating rate assets, with only three LIBOR floors above current LIBOR levels (of which one is 1 month USD and the others are EUR). 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, aircraft and ship leasing.

The Company's investment activities during February include:

·       An incremental investment of £3m in AP Wireless, a US-based cell towers management and leasing firm.

·       The sale of $7.2m Allegheny Energy Supply 6.75% 2039 bonds near its make-whole price due to the announced debt prepayment with the proceeds from asset sales.

Additionally, VanGansewinkel Groep, a Dutch waste management company, prepaid on the last day of February and was equivalent to 2% of NAV.

Sterling rose against the Euro and fell slightly against the Dollar during the month of February; however, the Investment Adviser remains committed to reducing NAV volatility arising from FX movements by maintaining its hedging strategy. As of the 28th February 2017, approximately 77% of NAV consisted of either Sterling assets or was hedged into Sterling.

The Company has more than adequate resources to cover the cash costs associated with its hedging activities. 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 increase in SEQI's NAV to 102.88p per share from 102.37p in January 2017 arose primarily through:

·       Interest income net of expenses of 0.43p;

·       A decrease of 0.34p in asset valuations; and

·       An increase of 0.42p from FX movements.

Ordinary Portfolio Summary (15 largest settled investments)

Transaction name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
A'lienor S.A.S. (A65)	EUR	Private	Senior	37.4	Transport	Road	3.48
AP Wireless Infrastructure	GBP	Private	Senior	33.0	TMT	Towers	6.55
IO Data Centers LLC	USD	Private	Senior	30.3	TMT	Data Centers	9.00
Beamish HoldCo 2017	GBP	Private	Senior	30.0	Accommodation	Health Care	9.99
Abteen Ventures	USD	Private	Senior	28.3	TMT	Data Centers	8.00
Regard Group Mezzanine	GBP	Private	Mezz	22.9	Accommodation	Health Care	12.12
Natgasoline Senior Unsecured	USD	Private	Mezz	21.2	Other	Industrial Infrastructure	9.99
Exeltium Mezzanine	EUR	Private	Mezz	18.8	Power	PPA	9.40
Welcome Break No.1 Ltd	GBP	Private	Mezz	18.3	Transport	Motorway Services	8.35
Bristow Group 6.25% 2022	USD	Public	Mezz	16.6	Transport Assets	Aircraft	9.68
Neoen Production	EUR	Private	HoldCo	16.1	Renewables	Solar & Wind	6.99
Danaos Snr Secured 2018	USD	Private	Senior	15.5	Transport Assets	Shipping	15.69
Longview TL B	USD	Private	Senior	13.8	Power	Elec Generation	10.57
Alinta Energy TL B	USD	Private	Senior	13.6	Utility	Elec Supply	6.48
NRG Energy Inc 7.25% 2026	USD	Public	Senior	13.3	Power	Elec Generation	6.77

Note (1) - excluding accrued interest

Market Summary

February was a less active month in the primary infrastructure debt space with only 6 project finance transactions closing across N. America and Western Europe, out of which 5 were refinancings of existing projects.

The only project finance origination that closed in February was the $337m 450MW Birdsboro gas-fired power plant in Pennsylvania.

February was a strong month for the U.S. in terms of its nonfarm payroll number and growth of new private sector employment. With the labour market in the U.S. nearing full employment, wage growth is expected to speed up, possibly resulting in a return to cyclical Fed rate increases given the recent steepening of the yield curve. 

Eurozone inflation in February accelerated to the ECB's target of 2%, but Mario Draghi has confirmed that rates will continue to stay at record lows until faster real wage growth, and its bond-buying programme is completed.

During February, Sterling rose against the Euro and fell slightly against the Dollar, ending the month at €1.17 and $1.24 respectively. The Bloomberg USD High Yield Corporate Bond Index rose sharply to 175.

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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