Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Jul 14, 2017

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RNS Number : 0320L

Sequoia Economic Infra Inc Fd Ld

14 July 2017

14 July 2017

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 30 June 2017 and Investment Update

Ordinary Share update

SEQI's NAV increased to 101.34p per share from 101.22p per share on 31st May 2017 which arose primarily through:

·      Interest income net of expenses of 0.42p;

·      A decrease of 0.04p in asset valuations;

·      A decrease of 0.25p from FX movements;

During June, the Company had invested or committed to invest a total of £72.1m which resulted in the total invested portfolio representing approximately 77.9% of the Company's NAV as of the 30th June 2017. At month-end, the Company had gross leverage of £40m which has been drawn and partially deployed, and represents approximately 5.3% of NAV.

The portfolio held 29 private debt investments and 17 infrastructure bonds for a total of 46 investments that covered 8 sectors and 24 subsectors, and are collectively valued at £567.2m 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 4.8 years.

The weighted average purchase price of the Company's acquired investments was approximately 96.5% of par, and of those, only 14% had some form of construction risk.

During June, Sterling fell slightly against the Euro but rose sharply against the Dollar, ending the month at €1.1398 and $1.3025 respectively, and the Bloomberg USD High Yield Corporate Bond Index fell slightly to 178.4.  As of the 30th June 2017, approximately 88% of NAV consisted of either Sterling assets or was hedged into Sterling.

The Company has 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.

Approximately 44% of the invested portfolio comprises floating rate assets, with only two LIBOR floors above current LIBOR levels (EUR). As such, the portfolio's yield is likely to rise over time as LIBOR increases. The Company expects the floating rate proportion to exceed 50% once the proceeds of the recent equity issue are deployed.

The Company's investment activities during June include:

·      First drawdown of £8.3m for the construction of a student housing development in Glasgow;

·      The primary participations in the Apollo Aviation 2017-1 C notes and the Heathrow 3.875% 2027 bonds, whose par values amount to $7.5m and £10m respectively;

·      Incremental investments in the following assets:

o  $3.6m of Apollo Aviation 2016-2 C notes;

o  $12.5m of IO Data Centers loan;

o  $5m of Global Ship Lease 10% 2019 bonds;

o  $7m of Talen Energy's 6.5% 2025 bonds;

Lastly, the £30mm FC Beamish Bidco deal prepaid in June which was in-line with the Company's expectations.

Ordinary Portfolio Summary (15 largest settled investments)

Transaction name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
IO Data Centers LLC	USD	Private	Senior	38.4	TMT	Data Centers	9.00
A'lienor S.A.S. (A65)	EUR	Private	Senior	38.0	Transport	Road	3.29
AP Wireless Infrastructure	GBP	Private	Senior	33.0	TMT	Towers	6.31
Cory Environmental	GBP	Private	HoldCo	32.7	Utilities	Waste to Energy	8.50
Abteen Ventures LLC	USD	Private	Senior	26.9	TMT	Data Centers	8.00
Regard Group Mezzanine	GBP	Private	Mezz	23.6	Accommodation	Health Care	12.06
Exeltium Mezzanine	EUR	Private	Mezz	20.5	Power	PPA	12.39
Natgasoline Senior Unsecured	USD	Private	Mezz	20.2	Other	Industrial Infrastructure	10.00
Welcome Break No.1 Ltd	GBP	Private	Mezz	18.3	Transport	Motorway Services	8.33
NGG Finance 5.625% 2073	GBP	Public	Mezz	17.0	Utilities	Electricity Distribution	3.63
Neoen Production	EUR	Private	HoldCo	16.6	Renewables	Solar & Wind	7.00
Cheniere Corp Christi 7% 2024	USD	Public	Senior	12.8	Transport	Ports	4.93
NRG Energy Inc 7.25% 2026	USD	Public	Senior	12.7	Power	Electricity Generation	6.58
GFL 9.875% 2021	USD	Public	Senior	12.5	Utility	Waste	3.45
Green Plains TL B	USD	Private	Senior	12.3	Other	Alternative Fuel	6.60

Note (1) - excluding accrued interest

Market Summary

A total of 17 project finance transactions closed in June throughout the Company's eligible jurisdictions, and worth, in aggregate, $4.05bn. Notable transactions include the South Western Rolling Stock project to purchase trains for South Western in the UK, which received £1,015m of financing of which £895m was debt, and the 365MW Vortex UK Solar PV Portfolio Refinancing, which received £355m in debt funding.

Eurozone growth was strong in June, with unemployment throughout the region at an eight year low and factory activity at a six year high. While inflation was still below the 2 per cent target, Mario Draghi signalled that the ECB may begin to tighten its economic policy.

The Federal Reserve raised rates in the middle of the month and signalled that they may increase rates once more during 2017. The unexpected outcome of the General Election led to more uncertainty about the direction the British economy will take.

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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