Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Nov 14, 2018

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RNS Number : 2423H

Sequoia Economic Infra Inc Fd Ld

14 November 2018

14 November 2018

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 31 October 2018 and Investment Update

Ordinary Share update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 101.42p from the prior month's NAV of 100.36p per share (being the 28 September cum-income NAV less the dividend declared in respect of the quarter ended 28 September). The changes in NAV arose primarily through:

·      Interest income net of expenses of 0.66p;

·      A decrease of 0.20p in asset valuations;

·      An increase of 0.02p from FX movements; and

·      A gain of 0.58p from the issuance of shares at a premium to NAV.

During October, the Company completed its successful equity issue, raising approximately £253 million of gross proceeds. The proceeds have principally been used to repay the outstanding balance of approximately £116 million of the £150 million multi-currency revolving credit facility. The Company intends to deploy the remaining proceeds of the equity issue into its strong pipeline of attractive investment opportunities.

At month end, the Company's total net assets were £1.08bn. The Company also had undrawn commitments, four additional investments and one asset sale in the process of settlement, collectively valued at £149.9m.

The Company's invested portfolio comprised of 43 private debt investments and 16 infrastructure bonds across 8 sectors and 24 sub-sectors and had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.5% and a weighted average life of approximately 4.9 years. Private debt investments represented 87.1% of the total portfolio and 67.4% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was c.96.2% of par. Investments which are pre-operational represented 15.2% of total assets.

The Company's invested portfolio remains geographically diverse with 42% located across the US, 18% in the UK, 29% in Europe, and 11% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy but has invested in selective opportunities in Spain. The Company's pipeline of economic infrastructure debt investments remains strong and is diversified by sector, sub-sector, and jurisdiction.

As at 31 October 2018, approximately 95% of the Company's 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.

The Company's settled investment activities during October include:

·      A $70.0m participation in the Salt Creek Midstream term loan refinancing;

·      A $30.0m primary loan to EIF Van Hook Term Loan B, a midstream oil and gas company in North Dakota;

·      A €25.6m primary purchase of Ziton AS' 6.90% 2021 first-lien bonds backed by three offshore wind maintenance vessels;

·      An additional €5.0m disbursement to Whittle Schools, a private school in Washington D.C.

The investments that were sold, called, or prepaid during October were:

·      The $65.0m prepayment of the Salt Creek Midstream term loan;

·      The £30.6m prepayment of the mezzanine loan to Cory Riverside;

·      The €10.9m call of the DBB Jack-up 8.5% 2019 bonds.

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
Hawaiki Mezzanine Loan	USD	Private	Mezz	55.8	TMT	Undersea cable	10.4
Salt Creek Midstream	USD	Private	Senior	54.9	Utility	Midstream	5.5
Tracy Hills TL 2025	USD	Private	Senior	47.0	Other	Residential Infra	10.3
Scandlines Mezzanine 2032	EUR	Private	HoldCo	44.3	Transport	Ferries	6.5
Bannister Senior Secured	GBP	Private	Senior	42.0	Accomm.	Health Care	7.9
Adani Abbot Holdco 2021	AUD	Private	HoldCo	41.6	Transport	Port	6.9
Bizkaia TL 2021	EUR	Private	HoldCo	35.5	Power	Elec. Generation	7.7
Sunrun Hera 2017-B	USD	Private	Mezz	31.4	Renewables	Solar & Wind	7.5
Abteen Ventures	USD	Private	Senior	27.9	TMT	Data Centers	5.2
Aquaventure	USD	Private	Senior	27.4	Utility	Water	8.4
Warnow Tunnel	EUR	Private	Senior	25.7	Transport	Road	6.9
EIF Van Hook TL B 2024	USD	Private	Senior	23.3	Utility	Midstream	7.8
Panda Patriot	USD	Private	Senior	23.0	Power	Elec. Generation	8.1
Ziton Senior Secured 2021	EUR	Private	Senior	22.9	Transport assets	Specialist Shipping	6.5
Terra-Gen Power TL B	USD	Private	Senior	22.5	Renewables	Solar & Wind	12.2

Note (1) - excluding accrued interest

Market Summary

A total of 39 project finance transactions closed in October throughout the Company's eligible jurisdictions, worth $28.1bn in aggregate. Notable transactions during the month include:

·      €71m financing of the development of a Finnish wind farm;

·      A £75m bond issuance by Places for People to refinance debt;

·      A £900m debt issuance to fund the development of the Blankenburg Tunnel in Germany; and

·      A £31m financing for the development of a Primary Care Centre in Northern Ireland.

High-yield bond investors withdrew $36bn from bond funds in October; the largest monthly withdrawal since 2015. While the spreads on US and EUR corporate bonds increased by c.50bps during the month, the private loan market did not experience the same increase in yields as evidenced by the spreads on the S&P US and European Leveraged Loans Index which remained relatively steady month-on-month.

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

LEI: 2138006OW12FQHJ6PX91

For further information please contact:

Sequoia Investment Management Company                                 +44 (0)20 7079 0480

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Greg Taylor

Stifel Nicolaus Europe Limited                                                        +44 (0)20 7710 7600

Neil Winward

Mark Bloomfield

Gaudi Le Roux

Tulchan Communications (Financial PR)                                       +44 (0)20 7353 4200

James Macey White

Martin Pengelley

Elizabeth Snow   

Praxis Fund Services Limited (Company Secretary)                    +44 (0) 1481 755530

Matt Falla                                                                                              

About Sequoia Economic Infrastructure Income Fund Limited

The Company 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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