Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Dec 14, 2018

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RNS Number : 4195K

Sequoia Economic Infra Inc Fd Ld

14 December 2018

14 December 2018

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 30 November 2018 and Investment Update

Ordinary Share update

The NAV for SEQI, the specialist investor in economic infrastructure debt, decreased to 101.34p from the prior month's NAV of 101.42p. The changes in NAV arose primarily through:

·      Interest income net of expenses of 0.62p;

·      A decrease of 0.63p in asset valuations; and

·      A decrease of 0.07p from FX movements.

The decrease in the Company's NAV in November is primarily a result of widening credit spreads. The Bloomberg Barclays Global High Yield Index fell by 1.17% during the month, but the Company's assets experienced only a 0.63p decrease in valuations suggesting infrastructure debt is, to a significant extent, insulated from the wider volatility in the credit markets.

At month end, the Company's total net assets were £1.1bn. The Company also had undrawn commitments, and two additional investments, collectively valued at £151.1m.

Following investments that were called or repaid during the month, the Company's invested portfolio comprised of 42 private debt investments and 19 infrastructure bonds across 8 sectors and 23 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 85.7% of the total portfolio and 64.7% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was c. 97.2% of par. Investments which are pre-operational represented 13.8% of total assets.

The Company's invested portfolio remains geographically diverse with 45% located across the US, 15% in the UK, 29% in Europe, and 10% 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 30 November 2018, approximately 98% 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 November include:

·      A $40m primary loan to Seaport Financing LLC, a midstream oil and gas terminal located in the Pacific Northwest;

·      A $20m primary purchase of Bluewater Holding BV's 10% 2023 bonds, a midstream oil and gas processing, storage, and offloading facility in Norway;

·      A $20m primary loan to vXchnge Investment, an operator of 14 data centres in the US;

·      A £15m secondary purchase of Electricite de France's variable rate 2029 bonds, a Paris-based utility group involved in the generation, transmission, distribution, supply, and marketing of electricity;

·      A PLN 21.5m primary loan to Project Warsaw to finance up to 80% of the VAT payments for the construction of their 55 solar PV assets, which are expected to be reimbursed by the Polish Government;

·      A £3.4m secondary purchase of Voyage Care 5.875% 2023 bonds; a leading care provider for patients with complex health needs in the UK;

·      An additional £5m secondary purchase of National Grid's 2073 bonds;

·      An additional $5m secondary purchase of Paradigm Midstream's term loan;

·      An additional £4m secondary purchase of Heathrow 3.875% 2027 bonds; and

·      An additional €900k secondary purchase of Ziton AS variable rate 2021 bonds.

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

·      The $17.8m repayment of Green Plains Processing's term loan B;

·      The €6.7m repayment of the Seabiscuit term loan;

·      The partial £13.6m mezzanine loan repayment to Welcome Break; and

·      The €10.9m call of DBB Jack-up Services variable rate 2019 bonds.

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
Salt Creek Midstream	USD	Private	Senior	54.9	Utility	Midstream	7.8
Hawaiki Mezzanine Loan	USD	Private	Mezz	54.0	TMT	Undersea cable	11.3
Tracy Hills TL 2025	USD	Private	Senior	47.0	Other	Residential Infra	10.3
Scandlines Mezzanine 2032	EUR	Private	HoldCo	44.4	Transport	Ferries	6.5
Adani Abbot Holdco 2021	AUD	Private	HoldCo	42.9	Transport	Port	9.0
Bannister Senior Secured	GBP	Private	Senior	42.0	Accomm.	Health Care	7.9
Bizkaia TL 2021	EUR	Private	HoldCo	35.5	Power	Elec. Generation	7.7
Aquaventure	USD	Private	Senior	35.3	Utility	Water	8.2
Project Warsaw	EUR	Private	Senior	31.8	Renewables	Solar & Wind	5.9
Sunrun Hera 2017-B	USD	Private	Mezz	31.4	Renewables	Solar & Wind	7.5
Seaport TL B	USD	Private	Senior	31.3	Transport	Port	8.2
Sacramento Data Centre	USD	Private	Senior	28.6	TMT	Data Centers	11.0
Abteen Ventures	USD	Private	Senior	27.8	TMT	Data Centers	5.1
EIF Van Hook TL B 2024	USD	Private	Senior	26.7	Utility	Midstream	8.4
Warnow Tunnel	EUR	Private	Senior	25.9	Transport	Road	6.9

Note (1) - excluding accrued interest

Market Summary

A total of 51 project finance transactions closed in November throughout the Company's eligible jurisdictions, worth $21.3bn in aggregate. Notable transactions during the month include:

·      A £2.8bn financing for the construction of the 950MW Moray East Offshore Wind Farm; and

·      CAD 167m financing for phase one of the Royal Inland Hospital Patient Care Tower PPP in British Columbia, Canada.

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.

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