Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Jun 12, 2015

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RNS Number : 9665P

Sequoia Economic Infra Inc Fd Ld

12 June 2015

12 June 2015

Sequoia Economic Infrastructure Income Fund Limited

Net Asset Value as at 29 May 2015 and Investment Update

The Board of Directors of the Company is pleased to announce the unaudited net asset value per Ordinary Share ("NAV") as at 29th May 2015 of 97.63 pence.  The NAV includes income for the period since Admission.

As at the 29th May 2015, the Company owned ten infrastructure bonds and two loans, collectively valued at £57.0 million, including accrued interest, with an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 7.3% and an average life across the acquired portfolio of approximately 9.0 years. Of these, six were indicated to investors in the Prospectus as being part of the Target Portfolio and six are new transactions.

Investments added in May include a senior loan to Biffa, a UK company that operates PFI, municipal and commercial waste collection and management services; a senior secured bond issued by CHC Group, a Canadian helicopter lessor; and a small bond position (that will be increased over time) issued by Care UK, a leading UK operator of nursing homes and other healthcare services.

In addition, the Company has purchased two loans, one bond, and one incremental investment in a loan it has already purchased, with an aggregate purchase price of approximately £17.4m that are in the process of settling (and as such are not currently reflected in the NAV).

In aggregate, the purchase price of these 15 transactions (excluding accrued interest) will represent approximately 50.2% of the net proceeds of the IPO. The investments are across the UK, Western Europe and the US and include the road, rail, shipping, utility and aircraft leasing sectors.

The Company has not disposed of any investments since the IPO.

The slight decrease in the Company's NAV of approximately 0.17% arises primarily from a decline in the value of the Euro versus Sterling (down 1.8% month-on-month), which reduced the NAV by approximately 0.35%, and negative mark-to-market adjustments on acquired assets. These were offset in part by interest accretion on the acquired portfolio.

May saw 17 infrastructure transactions close totalling over $18bn, although a staggering $11.5bn relates to the Corpus Christi LNG facility in the United States.  Notable was the significant number of solar plants that reached financial close.  Other asset types included rail and road transactions in the United States and Australia. 

Bristol Airport, wholly-owned by Ontario Teachers Pension Plan, successfully completed a transaction that mixed 7- and 10-year bank loans with a 15-year institutional tranche.  Another landmark transaction was the Yozgaz Hospital in Turkey, the first hospital PPP to achieve an 18-year tenor relying solely on commercial lenders.  Finally, a milestone was reached with the issuance of senior and junior bonds to finance the Moscow-St Petersburg availability road PPP. 

The Bristol Airport transaction demonstrated that some institutional investors are comfortable with high gearing, as EBITDA of £39m would result in gross leverage of roughly 8.3x. The Turkish hospital provides an interesting pricing comparison for senior debt, at 350 bps over mid-swaps.

During May, the 10-year US Treasury widened slightly from 2.03% to 2.12% while Bunds moved from 0.36% to 0.49%.  Corporate High Yield indices were approximately flat, with for example the Bloomberg USD High Yield Corporate Bond Index moving from 156.4 to 157.0.  While strong demand for senior infrastructure debt is keeping margins narrow, we are still finding opportunities to deploy mezzanine funding at attractive yields.

Portfolio Summary

Ten largest settled trades

Transaction name	Currency	Type	Value £mm	% of NAV	Sector	Sub-sector	Yield to maturity / worst (%)
Biffa TL A	GBP	Private	9.8	6.7%	Utility	Waste	6.38
Dulles Greenway 2029	USD	Public	7.8	5.4%	Transport	Road	6.45
North Las Vegas Water 6.572% 2040	USD	Public	7.0	4.8%	Utility	Water	7.60
Global Ship Lease 10% 2019	USD	Public	6.9	4.7%	Transport assets	Shipping	7.83
Ascendos Rail 2nd lien	EUR	Private	4.9	3.3%	Transport assets	Rail	5.63
Bristow Group 6.25% 2022	USD	Public	4.6	3.1%	Transport assets	Aircraft	6.35
CHC Helicopter 9.25% 2020	USD	Public	4.5	3.1%	Transport assets	Aircraft	13.23
Viridian 7.5% 2020	EUR	Public	3.7	2.5%	Power	Electricity Generation	7.06
First Energy Solutions 6.8% 2039	USD	Public	3.4	2.3%	Power	Electricity Generation	6.51
NRG Energy Inc 6.25% 2024	USD	Public	2.0	1.4%	Power	Electricity Generation	6.25
Portfolio total / average			54.6	37.3%			7.27
Positions outside top ten			1.8	1.2%			7.25
Portfolio total / average			56.4	38.5%			7.27

NB. Value column above excludes accrued interest.

The Company's monthly investor report and Solvency II certificate will be made available at http://www.seqifund.com/

Sequoia Investment Management

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

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.

This information is provided by RNS

The company news service from the London Stock Exchange

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