Sequoia Economic Infrastructure Income Fund Ltd.

Net Asset Value • Jul 14, 2020

National Storage Mechanism | Additional information

RNS Number : 8702S

Sequoia Economic Infra Inc Fd Ld

14 July 2020

14 July 2020

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

NAV update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 99.28 pence per share from the prior month's NAV of 98.21 pence per share, representing an increase of 1.07 pence per share.

The gain in asset valuations can be attributed primarily to spread tightening of comparable investments across the portfolio and continued positive credit developments in the wake of the ongoing COVID-19 pandemic.

A full attribution of the changes in the NAV per share is as follows:

	pence per share
May NAV	98.21
Interest income, net of expenses	0.72
FX movements, net of hedges	-0.18
Increase in asset valuations	0.53
June NAV	99.28

Update on the effects of COVID-19 on the Portfolio

The Investment Adviser, the Investment Manager, and PWC, the independent valuation agent have continued analysing the effect of COVID-19 on the Company's portfolio which also includes a market benchmarking exercise to conclude on spread and yield adjustments for each of the investments in the portfolio.

In summary, the spread widening across the portfolio during the second half of March 2020 continued its reversal throughout June, with several of the Company's investments performing better than expectations throughout the lockdown. The spread tightening seen in the markets and the broader credit outperformance contributed to another market movements gain this month of 0.53 pence per share.

The restructuring process of the US midstream business is still ongoing. Since March, there has been some recovery in the valuations of the previous investments that have been significantly marked down as a result of the ongoing pandemic and continued weakness in oil prices. There were no material asset write downs in June.

Further Portfolio update

As at 30 June 2020, the Company had cash of £74.2m and had drawn £76.0m on its £280m Revolving Credit Facility. The Company also had undrawn commitments on existing investments collectively valued at £67.4m. As of 30 June 2020, the Company's invested portfolio comprised of 59 private debt investments and 12 infrastructure bonds across 8 sectors and 28 sub-sectors. It had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 10.7% and a weighted average life of approximately 5.5 years. Private debt investments represented 94% of the total portfolio and 66% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 96.6% of par. Investments which are pre-operational represented 11.5% of total assets.

The Company's invested portfolio remains geographically diverse with 53% located across the US, 15% in the UK, 26% 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 97.3% of the Company's NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate resources to cover margin calls on its hedging book.

The Company's settled investment activities during June include:

·      A $50.0m primary senior secured loan to Genon Bowline Power with 1st lien on a natural-gas plant serving the NYISO market;

·      An additional NOK 3.0m secondary acquisition of Exmar's variable rate bonds maturing in 2022, backed by LNG and LPG vessels;

·      An additional $1.6m disbursement to Prime Data Centres for the development of a data centre campus in Sacramento, California; and

·      An additional $0.9m disbursement to Bourzou Equity, a company created for the construction of a data centre in Virginia.

The following Company's investments were sold or prepaid in June:

·      $28.2m senior secured loan to Panda Patriot backed by an 829MW CCGT power plant in Pennsylvania; and

·      €26.4m secondary loan to Project Serrezuela, a portfolio of operational solar PV plants in the Murcia region of Spain.

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	62.1	TMT	Telecom towers	6.30
Hawaiki Mezzanine Loan	USD	Private	Mezz	54.5	TMT	Undersea cable	15.00
Expedient Data Centers Senior Secured	USD	Private	Senior	51.2	TMT	Data centers	6.16
Terra-Gen Power TL B	USD	Private	Senior	45.7	Renewables	Solar & wind	9.31
Hawkeye Solar HoldCo 2030 1, 2, and 3	USD	Private	HoldCo	43.6	Renewables	Solar & wind	8.25
Tracy Hills TL 2025	USD	Private	Senior	43.5	Other	Residential infra	9.29
Scandlines Mezzanine 2032	EUR	Private	HoldCo	43.0	Transport	Ferries	7.98
Jetpeaks HoldCo 2027	USD	Private	HoldCo	43.0	Power	Electricity generation	7.79
Euroports 2nd Lien 2026	EUR	Private	Mezz	42.7	Transport	Port	9.05
Bizkaia TL 2021	EUR	Private	HoldCo	41.4	Power	Electricity generation	9.07
Adani Abbot HoldCo 2021	AUD	Private	HoldCo	41.0	Transport	Port	12.55
Bannister Senior Secured 2025	GBP	Private	Senior	40.7	Accommodation	Health care	8.76
GenOn Bowline Senior Secured 2026	USD	Private	Senior	40.4	Power	Electricity generation	7.00
Corral HoldCo 2024	USD	Private	HoldCo	37.9	Other	Refinery	11.69
American Shipping Company 9.25% 2022	USD	Private	Senior	37.3	Transport assets	Specialist shipping	7.48

Note (1) - excluding accrued interest

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

Gaudi le Roux

Neil Winward

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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