Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Feb 14, 2020

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RNS Number : 9850C

Sequoia Economic Infra Inc Fd Ld

14 February 2020

14 February 2020

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 31 January 2020 and Investment Update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 105.55p from the prior month's NAV of 104.76p per share (being the 31 December 2019 cum-income NAV of 106.32p less the dividend of 1.5625p per share declared in respect of the quarter ended 31 December 2019). The changes in NAV arose primarily through:

·      Interest income net of expenses of 0.70p;

·      An increase of 0.25p in asset valuations; and

·      Unhedged FX losses of -0.16p.

As at 31 January 2020, the Company had cash of £131.8m and had drawn £224m on its £280m Revolving Credit Facility ("RCF"). The Company also had undrawn commitments on existing investments collectively valued at £83.8m. The Investment Adviser has identified potential near-term investments available for purchase, with a total value of £380m.

The Company's invested portfolio comprised of 61 private debt investments and 13 infrastructure bonds across 8 sectors and 30 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.1% and a weighted average life of approximately 4.0 years. Private debt investments represented 92% of the total portfolio and 71% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 95.1% of par. Investments which are pre-operational represented 13.2% of total assets.

The Company's invested portfolio remains geographically diverse with 45% located across the US, 18% in the UK, 31% in Europe, and 6% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy but has selectively invested in opportunities in Spain. The Company's pipeline of economic infrastructure debt investments remains strong and is diversified by sector, sub-sector, and jurisdiction.

At month end, approximately 99% 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 January include:

·      An initial $12.5m primary holdco disbursement to Sierra financing 2024, the financing of a portfolio of nine Californian gas turbines;

·      An additional $17.0m disbursement to Sunrun Radcliffe, a leader in the US residential solar market; and

·      An additional $5.0m secondary acquisition of EIF Van Hook Midstream, a midstream oil & gas company that operates primarily in North Dakota, USA.

The following investments were sold or prepaid in January:

·      $49m Nasco Senior Secured 2020, the bridge financing of a helium extraction and processing plant in the USA; and

·      £47m Theatre (Hospital) plc bonds, the financing of operating hospitals in the UK.

On 10 February 2020, the Company announced a proposed partially pre-emptive issue of Ordinary Shares seeking to raise £250 million of gross proceeds before expenses. The Board have determined that the New Ordinary Shares will be issued at a price of 112.0 pence per New Ordinary Share. The results of the initial issue will be announced on 28 February 2020. The Company intends to use the proceeds raised from the issue to repay the drawn commitments under its £280m RCF. Any Net Issue Proceeds raised in excess of the amount drawn or committed under its RCF are expected to be deployed into the Company's near-term pipeline.

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
AP Wireless Junior	EUR	Private	Mezz	57.1	TMT	Telecom towers	6.3
Hawaiki Mezzanine Loan	USD	Private	Mezz	56.2	TMT	Undersea cable	11.7
Salt Creek Midstream	USD	Private	Senior	52.0	Utility	Midstream	7.6
Scandlines Mezzanine 2032	EUR	Private	HoldCo	43.6	Transport	Ferries	5.9
Tracy Hills TL 2025	USD	Private	Senior	43.6	Other	Residential infra	9.6
Euroports 2nd Lien 2026	EUR	Private	Mezz	42.0	Transport	Port	7.7
Bannister Senior Secured	GBP	Private	Senior	41.3	Accomm.	Health care	8.4
Adani Abbot HoldCo 2021	AUD	Private	HoldCo	38.1	Transport	Port	9.6
Corral HoldCo 2024	USD	Private	HoldCo	37.9	Other	Refinery	11.2
Kaveh Senior Secured TL 2021	USD	Private	Senior	37.9	TMT	Data centers	8.4
Whittle Schools B	USD	Private	Senior	37.7	Other	Private schools	10.8
Bizkaia TL 2021	EUR	Private	HoldCo	37.3	Power	Elec. generation	7.7
Warnow Tunnel	EUR	Private	Senior	35.4	Transport	Road	6.6
EIF Van Hook TL B 2024	USD	Private	Senior	35.4	Utility	Midstream	8.0
Bulb Senior TL 2021	GBP	Private	Senior	35.0	Utility	Electricity supply	7.2

Note (1) - excluding accrued interest

Market Summary

A total of 7 project finance transactions closed in January throughout the Company's eligible jurisdictions, worth $1.23 bn in aggregate. Notable transactions outside of the Company's investment activities during the month include:

·      A €57m financing for the construction and operation of three solar PV projects in Spain;

·      A €575m refinancing of Empark, a Spanish car park operator's debt; and

·      Van Oord's 50% acquisition of the 600MW Saare Offshore Wind farm off the coast of Estonia.

The US economy grew 2.3% in 2019, with 0.5% quarter on quarter growth for Q4 2019.

The Eurozone economy's final 2019 growth numbers was 1.0%, with 0.1% growth in Q4.

The UK economy was confirmed to have had 0.0% growth in Q4 2019, leading to 1.1% growth for the year.

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

Anurag Gupta

Jefferies International Limited                                                       +44 (0)20 7029 8000

Gary Gould

Stuart Klein

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

Martin Pengelley

Elizabeth Snow

Deborah Roney

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

Matt Falla

Katrina Rowe                                                                                       

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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