Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Jun 14, 2018

National Storage Mechanism | Additional information

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RNS Number : 3187R

Sequoia Economic Infra Inc Fd Ld

14 June 2018

14 June 2018

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 31 May 2018 and Investment Update

Ordinary Share update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 101.10p from the prior month's NAV of 100.39p per share. The changes in NAV arose primarily through:

·      Interest income net of expenses of 0.54p;

·      An increase of 0.01p in asset valuations;

·      A decrease of 0.03p from FX movements; and

·      A gain of 0.19p from issuance of new equity.

During May, the Company completed its successful, oversubscribed equity placing, raising approximately £75.7m of gross proceeds. The proceeds have principally been used to repay approximately £70.7m of the Company's £75.0m gross leverage, resulting in gross leverage of £5.0m, or 0.60% of NAV, at 31 May 2018. The Company's total net assets after deducting net borrowings were therefore £830.5m at month end. The Company also had undrawn commitments and one additional investment in the process of settlement collectively valued at £98.4m.

The Company's invested portfolio comprised of 37 private debt investments and 19 infrastructure bonds across 8 sectors and 23 subsectors, and had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.4% and a weighted average life of approximately 4.9 years. Private debt investments represented 81.4% of the total portfolio and 70.3% of it comprised floating rate assets. The weighted average purchase price of the Company's investments was c.96.0% of par. Investments which are pre-operational represented 15.0% of total assets.

The Company's invested portfolio remains geographically diverse with 44% located across the US, 25% in the UK, 23% in Europe, and 8% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy, but is considering selective opportunities in Spain.

As at 31 May 2018, approximately 95% 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.

The Company's settled investment activities during May include:

·      A £7.5m primary loan to Euro Garages, one of the largest independent motorway services providers in the UK and Europe;

·      An additional £1.3m disbursement to Clyde Street student housing in Glasgow; and

·      The sale of $29.0m Dulles Greenway 2029 zero-coupon bonds.

There were no called/prepaid positions during the month of May.

Ordinary Portfolio Summary (15 largest settled investments)

Transaction name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
Hawaiki Mezzanine Loan	USD	Private	Mezz	52.9	TMT	Undersea cable	12.0
Salt Creek Midstream	USD	Private	Senior	48.9	Utility	Midstream	6.8
A'lienor S.A.S. (A65)	EUR	Private	Senior	38.8	Transport	Road	5.7
Tracy Hills TL 2025	USD	Private	Senior	36.0	Other	Residential infra	10.3
Cory Environmental	GBP	Private	HoldCo	31.3	Utility	Waste-to-energy	8.5
Sunrun Hera 2017-B	USD	Private	Mezz	30.1	Renewables	Solar & Wind	7.4
Bulb Energy Senior Secured	GBP	Private	Senior	26.9	Utility	Electricity supply	8.8
Aquaventure	USD	Private	Senior	26.3	Utility	Water	8.2
Abteen Ventures	USD	Private	Senior	26.3	TMT	Data centers	7.9
Warnow Tunnel	EUR	Private	Senior	25.4	Transport	Road	6.4
Terra-Gen Power TL B	USD	Private	Senior	23.4	Renewables	Solar & wind	9.9
Clyde Street Glasgow	GBP	Private	Senior	20.6	Accomm.	Student housing	8.0
Exeltium Mezzanine	EUR	Private	Mezz	19.3	Power	PPA	9.4
Welcome Break No.1 Ltd	GBP	Private	Mezz	18.3	Transport	Motorway services	8.7
Theatre 2007-1 D	GBP	Public	Mezz	15.4	Other	Private Hospitals	13.1

Note (1) - excluding accrued interest

Market Summary

A total of 28 project finance transactions closed in May throughout the Company's eligible jurisdictions, worth $4.6bn in aggregate. Notable transactions during the month include:

·      A €160m long term financing of the first 89 MW phase of the Oweninny wind farm in County Mayo, Ireland.

·      A CAD $1.2bn financing of the Finch West light rail in Toronto, Canada. The bonds are senior secured. 

·      A €600m acquisition of the 450MW Neart na Gaoithe offshore wind farm.

The US economy added 223,000 jobs in May 2018, with unemployment at its lowest level since early 2000, and with average hourly earnings showing a year-on-year gain of 2.7%.

Despite the turbulence in Europe caused by the Italian coalition of Eurosceptic parties, unemployment in the Eurozone also ticked down slightly to 8.5%, which is the lowest recorded rate in the Eurozone since December 2008.

The Bank of England's Monetary Policy Committee declined to raise rates in May. However, earnings growth has moved above inflation, and the BOE is still projecting 0.4% growth in Q2 2018.

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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